Is Powell About to Resign? Fed Chaos Unfolds!

Jerome Powell, the Chair of the Federal Reserve, is once again in the spotlight, but not for interest rates or inflation. Instead, it’s a political storm brewing around his leadership.

President Donal Trump has turned up the heat, slamming Powell over high interest rates and even hinting that he wants him gone.

Some voices, like economist Mohamed El-Erian, argue that Powell should step down early to protect the Fed’s independence.

But others strongly disagree, saying a resignation now would do more harm than good. So, is Powell really about to walk away, or is he staying put?

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Key Takeaways

1. Jerome Powell faces growing political pressure. Trump’s public criticism is testing the Fed’s independence as Powell nears the final year of his term.

2. Some economists suggest Powell should resign early. Critics like El-Erian say his exit could shield the Fed from further attacks, but others call that a dangerous precedent.

3. Powell has shown no signs of quitting. Despite the noise, Powell remains committed to finishing his term through May 2026.

The Political Pressure on the Fed Chair

Jerome Powell is no stranger to criticism, but the latest wave feels different. Donald Trump, who appointed Powell during his presidency, is now one of his loudest opponents.

Trump has repeatedly blamed the Fed’s high interest rates for hurting the economy, especially the housing market. In his words, Powell is a “numbskull” who is making it harder for Americans to buy homes.

These public attacks are more than just political jabs, they touch the core of what makes the Federal Reserve function. The Fed is designed to operate independently from the White House.

That separation is essential so decisions on interest rates can be made based on economic data, not political agendas.

When Trump openly pushes for Powell’s removal or resignation, it raises real concerns about whether that independence is at risk.

Trump isn’t alone in this criticism. Some of his allies have questioned the Fed’s other actions too, like its expensive $2.5 billion headquarters renovation.

Still, much of the backlash seems rooted in frustration over rates, especially as Trump prepares for a likely presidential campaign.

This creates an uncomfortable situation for Powell, who must remain neutral and focused on data while fielding politically charged criticism.

Read Also: US Treasury Secretary and Donald Trump: How Debates Sparked Over Jerome Powell

Why Some Experts Say Powell Should Step Down

The idea of Powell resigning early is controversial, but not without support. Mohamed El-Erian, a respected economist and former PIMCO CEO, says Powell’s continued presence could weaken the Fed's reputations. 

He argues that Trump’s attacks are now aimed at the entire central bank, not just its leader. If Powell stays, El-Erian believes it could make the Fed look increasingly political and vulnerable.

His view is that an early exit could defuse the tension. It might even help restore public confidence in the institution if Powell steps aside and avoids a long political showdown.

El-Erian acknowledges it’s not an ideal solution, just the “least bad” option, considering the circumstances.

Still, this idea has drawn strong pushback. Critics like Alan Blinder, a former Fed vice chair, say resigning under pressure would send the wrong message.

It could suggest the Fed is willing to cave to political demands, which might damage its independence far more than any criticism ever could.

Others, like Raymond James analyst Ed Mills, worry about the market’s reaction. Powell leaving early could increase uncertainty and possibly even push rates higher, not lower.

Read Also: Will Trump Fire Jerome Powell? Inside the Fed Chair Showdown

Why Powell’s Staying Is the Likely Scenario

Despite all the noise, Jerome Powell has shown no sign that he plans to quit. His past comments are crystal clear.

In interviews and even in a book, Powell has insisted that he intends to serve his full term, no matter what. In fact, he once told a reporter: “You will not see me getting in the lifeboat.”

This determination seems to be holding strong. During a July 22 speech at the Fed’s conference on capital framework, Powell remained focused on policy and oversight.

He made no mention of stepping down. Instead, he emphasized the importance of effective supervision and risk management at large banks, a sign he’s still deeply engaged in the Fed’s work.

Support for Powell is also coming from inside the administration. Treasury Secretary Scott Bessent has defended Powell as a “good public servant,” even while calling for an internal review of the Fed’s operations.

Bessent made it clear he doesn’t believe Powell needs to resign, adding that it should be up to Powell whether he stays or goes.

With his term ending in May 2026, Powell has less than a year left. Unless something dramatic changes, all signs point to him staying the course.

Read Also: Who Will Replace Jerome Powell?

The Bigger Question: What’s at Stake for the Fed?

What’s happening with Powell goes beyond one man. This moment could shape how future administrations treat the Fed.

If Powell resigns under pressure, it could become easier for future leaders to push out central bank officials who don’t follow their economic playbook. That’s why many experts are so worried.

The Fed’s independence is a pillar of its credibility. When people believe the Fed is acting based on data, not politics, they trust its decisions more.

That trust stabilizes markets, helps manage inflation expectations, and gives the Fed room to act during crises.

The current drama is already affecting markets. Even rumors about Powell leaving have stirred brief selloffs and shifts in bond yields.

If he were to step down suddenly, the volatility could worsen, especially if there’s confusion about who would replace him.

So this isn’t just about Powell's job. It’s about whether the Fed can continue doing its job without political interference and how far the U.S. is willing to go to protect that.

Read Also: Does the US Government Hate Jerome Powell? Understanding the Drama

Conclusion

Jerome Powell is facing intense criticism and calls to step down, but so far, he remains steady in his role as Fed Chair. The bigger issue is not just his future, but the future of the Federal Reserve's independence.

If political pressure can remove a central bank leader, it opens the door to a dangerous precedent. For now, Powell seems determined to finish what he started.

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FAQ

When does Jerome Powell’s term end?

His term as Chair of the Federal Reserve ends in May 2026.

Can a president remove the Fed Chair?

Technically, it’s unclear. The president can’t easily fire the Fed Chair without cause, and doing so would likely face legal challenges.

Is Powell stepping down soon?

There’s no official sign that Powell plans to resign. He has stated several times that he intends to serve his full term.

Why is Trump criticizing Powell?

Trump blames Powell for keeping interest rates high, which he says hurts homebuyers and increases government borrowing costs.

What happens if Powell resigns early?

It could shake investor confidence, increase market volatility, and raise concerns about political interference in monetary policy.

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