If you’ve been following the news lately, you’ve probably seen the headlines screaming about a massive showdown between the White House and the Federal Reserve. It feels like every other week there’s a new rumor. People keep asking the same question: did Trump fire Jerome Powell already, or is he about to?
Honestly, the answer is a bit more complicated than a simple "yes" or "no," but as of right now, Jerome Powell is still the Chair of the Federal Reserve. He hasn't been fired.
But man, the tension is thick. We are currently in January 2026, and the relationship between President Trump and "Jay" Powell has reached a breaking point that looks more like a legal thriller than a dry discussion about interest rates.
What Really Happened with the Attempt to Fire Powell
Trump hasn't actually pulled the trigger on a formal firing, though he’s certainly hinted at it. Loudly.
Just yesterday, on January 14, 2026, Trump told reporters that he has "no plan" to dismiss Powell right this second, but he also called the situation a "holding pattern." It’s basically the political version of saying "we'll see."
The drama really peaked earlier this week when the Justice Department (DOJ) launched a criminal investigation into Powell. They aren't looking at interest rates, though. Instead, they’re digging into the $2.5 billion renovation of the Fed's headquarters in Washington. Trump’s team claims there’s "gross incompetence" and cost overruns. Powell, for his part, called the investigation a "pretext" to bully him into cutting rates.
It’s a mess.
Can a President even do that?
You might wonder why Trump doesn't just walk into the Eccles Building and say, "You're fired."
It’s not that easy. The Federal Reserve Act is pretty specific. A President can only remove a Fed Chair "for cause." In legal speak, that means things like neglect of duty or actual crimes—not just because the President wants cheaper mortgages.
If Trump tried to fire him over a policy disagreement, it would trigger a massive Supreme Court case. In fact, the Supreme Court has already signaled they might side with the Fed's independence.
Why the "Two Kevins" Matter Right Now
While everyone is asking did Trump fire Jerome Powell, the smart money is actually looking at who is next in line. Powell’s term officially ends on May 15, 2026.
Trump has already started talking about successors. He’s narrowed it down to what he calls the "Two Kevins":
- Kevin Hassett: Currently the National Economic Council Director. He’s a big believer in aggressive rate cuts.
- Kevin Warsh: A former Fed Governor who has been a frequent critic of the central bank’s recent moves.
Trump is expected to announce his pick by February. So, even if he doesn't fire Powell, he's basically just waiting for the clock to run out. It's a "shadow" replacement strategy.
The Economic Fallout of the Feud
This isn't just political theater. It actually affects your wallet.
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When the President and the Fed Chair are at war, the markets get jittery. Investors hate uncertainty. If the world thinks the Fed is no longer independent, they might stop buying U.S. Treasuries, which could actually push interest rates up—the exact opposite of what Trump wants.
International central bankers, including Christine Lagarde of the ECB, even released a statement this week backing Powell. They’re worried that if the U.S. Fed loses its independence, the global financial system could wobble.
Is Powell going to quit?
Short answer: No.
Powell has been very clear that he intends to serve out his term until May. He even has the option to stay on the Board of Governors until 2028, even after he’s no longer the Chair. If he does that, he could effectively block Trump from filling that specific seat with a loyalist for another two years.
Actionable Insights for You
Since you can't control the fight in D.C., you have to play the hand you're dealt. Here is how to handle the "Powell vs. Trump" volatility:
- Watch the May 15 Deadline: This is the real date that matters. Regardless of the DOJ investigation, May is when the leadership officially shifts.
- Don't time the market based on tweets: Political rhetoric often causes short-term "noise" in the stock market. Unless a formal firing or a Supreme Court ruling happens, the Fed's actual policy usually moves slower than the headlines.
- Keep an eye on the "Two Kevins": If Hassett is the pick, expect a more "dovish" (lower rate) environment. If Warsh gets it, things might be more unpredictable.
- Verify your news sources: During high-tension moments, fake reports about Powell being fired often circulate on social media. Always check the official Federal Reserve press page or major financial wire services like Reuters or Bloomberg before making financial moves.
The bottom line is that the institution is holding for now. Jerome Powell is still in the chair, and the legal barriers to removing him remain high, even with a DOJ probe looming over the Fed's renovation budget.