Will Donald Trump remove Federal Reserve Chair Jerome Powell from office? It's not a hypothetical question. On the surface, the answer seems obvious — "no." Following the U.S. Supreme Court's June ruling (more on that below), such speculation may seem far-fetched. Yet judging by recent statements from senior American politicians and officials, the issue is still very much on the White House's agenda — even though Powell's term as Fed Chair expires in just 10 months and 1 day, on May 15, 2026.
So what's the point of Trump's continued attacks on Powell if the law protects him from early dismissal? And how might this situation affect the U.S. dollar?
Trump again publicly criticized the Fed Chair, saying it "would be great if he resigned voluntarily." He went further, claiming that Powell is considering doing so: "I'm encouraged by information suggesting he's open to stepping down." Trump was likely referring not to media reports but to an insider comment made by Bill Pulte, head of the Federal Housing Finance Agency, who claimed that Powell agreed to leave his position voluntarily.
Powell himself has repeatedly denied any such intentions. He has stated that there are no legal grounds for his removal and that he does not plan to step down.
Here's where things get more serious:
The White House is no longer just issuing political complaints about Powell (such as his alleged slowness in loosening monetary policy), but is now accusing him of financial mismanagement — a claim that could have legal weight and serve as formal grounds for dismissal.
In May, the U.S. Supreme Court ruled in the case of Trump v. Wilcox, granting the president the authority to dismiss members of independent federal agencies (such as the NLRB). However, the Court made an exception for the Fed, declaring it a special entity that is immune to personnel changes initiated by the president.
In other words, if Trump were to fire Powell solely over policy disagreements, such an order would likely be overturned by the courts as unlawful. This is why the White House is pursuing another route:
Over the weekend, Trump's economic advisor, Kevin Hassett, suggested that the president could potentially justify Powell's removal due to overspending on renovations at the Fed's headquarters.
The scandal was initiated by Russell Vought, head of the White House Office of Management and Budget, who openly accused Powell of "mismanagement," stating that the renovation project is $600 million over budget. The original budget was $1.9 billion, which has since risen to $2.5 billion. Vought further criticized Powell for approving an unnecessarily lavish reconstruction that includes rooftop terrace gardens, VIP elevators, premium marble finishes, and even fountains.
The Fed has rejected these claims, arguing that the cost increases are due to the building's age (nearly 100 years old) and the legal requirements to remove lead and asbestos, which are expensive but mandated by law.
Nevertheless, the accusations are now public. Vought has officially requested a breakdown of the Fed's renovation budget, and Powell has asked the Fed's Inspector General to conduct an internal audit of the headquarters project.
It's important to note that under the Federal Reserve Act, Fed Board members — including the Chair — can only be dismissed "for cause," i.e., due to a legally established serious offense. Negligence or legal violations are among such causes. Therefore, if the Fed fails to defend itself against accusations of mismanagement and overspending, the case could, in theory, meet the "for cause" threshold.
However, in my view, the budget controversy appears to be more of a political tool than a genuine legal issue.
After all, "mismanagement" in the legal sense—especially for high-ranking officials—requires more than just budget overruns. It must involve serious misconduct, clear breaches of procurement rules, or, most crucially, personal benefit to Powell or a proven conflict of interest.
In this case, Powell did not act unilaterally. The Federal Reserve Board approved the renovation as a collective body, and the project underwent competitive bidding, architectural review, and environmental assessments. Cost increases were primarily due to the removal of lead and asbestos.
In short, the accusation of excessive spending (i.e., extravagance) seems more political than legal.
However, the situation must also be viewed in light of a recent Wall Street Journal report from June, which suggested that Trump may name a successor to Powell early in the fall or even August, to weaken Powell's standing. According to WSJ analysts, such a move would allow the named successor to influence investor expectations around future rate changes.
If this report proves accurate, and if the accusations of "mismanagement" continue to escalate (especially from top White House officials), Powell's position could indeed become weakened. Notably, Powell has not denied rumors that he may be considering stepping down voluntarily—he has only requested a formal review of the renovation project.
Rising concerns about the independence of the Fed and persistent calls for rate cuts are weighing on the U.S. dollar. This is one of the key fundamental factors currently helping the EUR/USD pair remain afloat in the 1.1680–1.1750 range.
Even if the renovation scandal soon fades (assuming the audit finds no violations), the White House will likely continue pressuring Powell to resign. In effect, this creates a Damoclean sword over the greenback — and adds another argument in favor of long positions on EUR/USD.
