Powell did not signal a rate cut at yesterday's Chicago Economic Club event. No one was more anxious than Trump.

The president, who had been wrestling with tariffs for over a month, was clearly enraged by the Federal Reserve's decision not to cut rates, and launched a fierce attack on Powell: "If I ask, Federal Reserve Chairman Powell will leave office. I am not satisfied with him. I don't think he's doing a good job." "Powell is slow to react and slow to act" "Powell is playing politics, and rates should be lowered now." "The people at the Federal Reserve are not very smart, and Powell is terrible." Powell is "someone I never really liked". Powell, however, firmly defended the independence of the Federal Reserve, rejected political interference, and stated that the Federal Reserve would make decisions based solely on what is most beneficial to the American people.

Trump Challenges the Independence of the Federal Reserve

Trump has never hidden his disappointment with Powell. On April 17, 2025, he told reporters in the Oval Office: "If I want him to go, believe me, he will go soon!" Subsequently, he posted again on Truth Social urging the Federal Reserve Chairman to cut rates, "The European Central Bank is about to cut rates for the seventh time, and Powell, the 'always late gentleman', has messed everything up again. Yesterday, he threw out another typical chaotic report - oil prices are falling, food prices are dropping, even eggs are getting cheaper, and the United States is making a fortune through tariffs. This 'half-beat behind' should have cut rates like the European Central Bank long ago, and now it's more urgent than ever. Powell's countdown to resignation should be accelerated!"

Trump's anger mostly stems from Powell's "conservative" attitude towards monetary policy. He believes that Powell failed to cut rates significantly in a timely manner, missing the window for stimulating economic growth. What frustrates Trump even more is that the Federal Reserve's high-interest-rate policy conflicts with the tariff plan he implemented after taking office. Trump's tariff policy aims to protect domestic industries but may drive up import prices and exacerbate inflationary pressures. The Yale Budget Lab estimates that these tariffs are equivalent to an additional $4,900 in real tax burden for each American household. In this context, Trump hopes the Federal Reserve will ease economic pressure through rate cuts to "protect" his policies.

As for whether Trump wants to fire Powell, although he told reporters in public that he does not regret nominating Powell, the WSJ report may provide some insight. Sources say Trump has privately discussed replacing Powell with former Federal Reserve Board member Kevin Walsh.

What Are the Obstacles to Firing Powell?

Can Trump really "fire" Powell as he wishes? The answer is not simple.

According to the Federal Reserve Act, the Federal Reserve Chairman and Board members can only be dismissed "for cause", typically referring to misconduct, dereliction of duty, or loss of capacity to perform duties, not policy differences. Historically, no Federal Reserve Chairman has been directly dismissed by a president, and this legal framework provides solid protection for the Federal Reserve's independence. Powell himself is clear about this. In November 2024, when asked if he would comply if Trump asked him to resign, he answered decisively: "No."

Additionally, Powell's term provides him with protection. He was initially nominated by Trump in 2017 and renominated by Biden in 2022, with his chairmanship set to continue until May 2026. Brookings Senior Fellow Sarah Binder noted that courts typically do not view differences in interest rate settings as "just cause", so Trump may face legal challenges if he forcibly fires Powell.

Even if legally allowed, firing Powell is politically risky. The independence of the Federal Reserve is not just a legal issue, but the foundation of market confidence. Binder warns that a presidential attempt to oust Powell would increase market uncertainty and undermine public trust in the Federal Reserve. This could lead to violent fluctuations in stock and bond markets, and even impact the cryptocurrency market. After all, while crypto assets claim to be "decentralized", their prices are still strongly influenced by macroeconomic conditions and investor sentiment.

Trump's aggressive approach has even worried some who criticize Powell. Senior Democratic Senator Warren stated that undermining the Federal Reserve's independence could trigger a market crash.

Although protected by legal and market "talismans", this does not mean Powell's position is completely safe. The U.S. Supreme Court is currently hearing a case involving the president's power to dismiss senior officials of independent agencies. While the case does not target the Federal Reserve but the National Labor Relations Board and the Merit Protection Board, the ruling could provide legal grounds for Trump. Although the 1935 "Humphrey's Executor v. United States" case established a precedent limiting the president from dismissing independent agency leaders without cause, today's conservative Supreme Court may revisit this ruling. If the court tends to expand presidential power, Powell's position could indeed be precarious.

Moreover, Powell's support is not unbreakable. Compared to Trump's first term, Powell now faces more questioning. Some believe the Federal Reserve was too slow to curb inflation in 2022-2023, leading to policy mistakes. White House allies believe that Trump's Thursday morning post is more an attempt to disrupt Powell's position and shape him into a future "scapegoat for economic problems", potentially weakening his public support and increasing the risk of replacement.

What Is the Impact on the Crypto Market?

Perhaps firing Powell is not the most critical issue. For Trump, the goal seems to be pressuring the Federal Reserve to "open the floodgates" by significantly cutting rates to stimulate economic growth.

Rate cuts typically mean increased liquidity, decreased dollar purchasing power, and rising inflation expectations. In this environment, cryptocurrencies, especially Bitcoin, known as "digital gold", can attract capital inflows. Looking back to 2020, when the Federal Reserve lowered rates close to zero to respond to the pandemic, Bitcoin's price rose from under $10,000 to a historical high of $67,000 by the end of 2021. A similar scenario might replay under Trump's pressure for rate cuts.

Moreover, Trump's tariff policy may further drive up inflation. According to Powell's warning, tariffs may cause import prices to rise, squeeze household budgets, and push up prices. Yale University's estimates show that the inflationary effect of tariffs is equivalent to an additional $4,900 in real tax burden per household. Under inflationary pressure, investors may shift funds to mainstream cryptocurrencies like Bitcoin, or even chase high-risk Altcoins, triggering a bull market wave.

Looking further, if the Federal Reserve loses its independence due to political pressure, the credibility of U.S. monetary policy may be damaged. DeFi and blockchain technology are filling the gaps in the traditional financial system. If the Federal Reserve becomes politicized, it may accelerate investors' disappointment with the dollar system and drive funds into ecosystems like DeFi.

However, rate cuts are not a panacea. Powell warned at yesterday's Chicago Economic Club speech that Trump's tariff policy might push the U.S. economy into a "stagflation" dilemma - high inflation coexisting with slowing economic growth. This environment will make the Federal Reserve's dual mandate (price stability and maximizing employment) extraordinarily complex.

In a stagflation environment, the Federal Reserve may face a dilemma: rate cuts to stimulate the economy could exacerbate inflation, while maintaining high interest rates would suppress growth. For the cryptocurrency market, this means dramatic price fluctuations.

This game between Trump and Powell may ultimately evolve into an unwinnable war of attrition, with market confidence and economic stability being the casualties. History tells us that the cost of political intervention is often paid by ordinary investors' wallets and supermarket bills.

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