Senator Elizabeth Warren, a well-known politician from Massachusetts, has issued a serious warning: if President Donald Trump tries to fire Jerome Powell, the head of the Federal Reserve (the US central bank), it could cause a massive crash in the stock market.
Warren made these comments after Trump publicly criticized Powell, saying his “termination cannot come fast enough!” However, a White House official later clarified that Trump was not actually planning to remove Powell from his position.
The Federal Reserve (often called "the Fed") is an independent institution that controls interest rates and keeps the economy stable. Its decisions affect everything from job growth to inflation.
If the president could fire the Fed chair anytime he disagreed with him, it would mean politicians could interfere with the economy for their own benefit. Warren argues this would destroy trust in the US financial system and make the country look like an unstable dictatorship.
Speaking at the New York Stock Exchange, Warren stated:
“I have tangled with [Powell] on a regular basis about both regulations and interest rates. But understand this: If Chairman Powell can be fired by the president of the United States, it will crash markets in the United States.”
She further explained:
“The infrastructure upholding the stock market — and therefore the global economy — is the idea that the big pieces move independent of the politics. If key economic levers are subject to a president who just wants to wave his magic wand, then the U.S. will be indistinguishable from any other two-bit dictatorship around the world.”
President Trump has often blamed Powell for not cutting interest rates fast enough. During Biden’s presidency, the Fed raised rates to control inflation but started lowering them in 2024.
However, Powell has refused to speed up rate cuts, partly because of Trump’s unpredictable trade policies, including new tariffs (taxes on imports). In a recent speech, Powell said these tariffs could hurt the economy rather than help it.
Angered by this, Trump posted on Truth Social:
“Powell was always TOO LATE AND WRONG. He should have lowered rates long ago, but he should certainly lower them now. Powell’s termination cannot come fast enough!”
Legally, no. The Fed is designed to operate independently from the White House to prevent political interference. Powell himself has said that the president does not have the power to remove him.
However, Warren’s warning highlights a bigger concern: if Trump tries to challenge this rule, it could create chaos in financial markets. Investors rely on the Fed’s independence—if they think the president can control interest rates for political gain, they might panic and sell stocks, leading to a crash.
Right now, the White House says there are no plans to fire Powell. But if Trump keeps pushing the idea, it could create uncertainty in the markets.
Warren and other lawmakers are likely to defend the Fed’s independence, arguing that letting a president remove its leader would be dangerous for the economy.
Even if you don’t invest in stocks, Fed decisions affect everyday life:
If the president can manipulate the Fed, it risks all of this stability.
Senator Warren’s warning is not just about Powell—it’s about protecting the US economy from political games. The stock market relies on trust, and if that trust is broken, the consequences could be severe.
For now, the Fed remains independent, but this clash between Trump and Warren shows how fragile that independence could be if challenged.
Please share by clicking this button!
Visit our site and see all other available articles!