President Donald Trump is considering replacing Federal Reserve Chair Jerome Powell, despite lacking the authority to do so directly. Trump has publicly expressed dissatisfaction with Powell, stating, “I’m not happy with him. I let him know it.
And oh, if I want him out, he’ll be out of there real fast, believe me. If we had a Fed chairman who understood what he was doing, interest rates would be coming down.”
Powell has resisted raising interest rates, focusing instead on the impacts of Trump’s tariffs and whether they may lead to higher inflation. Fed official Mary Daly has similarly stated that rate cuts should be delayed if inflation remains persistently high.
Under the U.S. Federal Reserve Act, the president cannot directly fire the Fed chair. The Fed’s structure is intended to insulate it from political pressure, allowing it to make decisions in the economy’s best interest, even if those decisions are unpopular with the administration.
Trump questions Fed’s political independence
However, Trump’s administration has often challenged political norms. According to Kevin Hassett, the National Economic Council director, Trump is exploring whether he has the authority to replace Powell. Cryptocurrency bulls view the potential firing of the Fed chair as a sign of weakening confidence in the central bank, predicting that such a move would drive the U.S. dollar lower and boost Bitcoin in the long run.
Historic examples of countries with central banks suffering from political interference, such as Turkey and Zimbabwe, show that their currencies often underperform. Bitcoin’s 4-hour chart indicates that it has been trading within a tight range over recent weeks, forming a bullish pennant—a classic bullish pattern that typically precedes a strong bullish breakout. As Bitcoin forms a bullish pennant and political tensions rise between Trump and the Federal Reserve, the market dynamics are set for potential volatility.
Investors will be closely watching for any signs of political interference with the Fed and its consequent impact on financial markets. The anticipated breakout could see Bitcoin reaching new highs, with significant implications for both traditional and digital currencies.
