Overview

• Trump privately asked GOP lawmakers whether to remove Jerome Powell and has had a firing letter drafted to effect the change within eight months unless fraud is established.
• The president pointed to cost overruns on the Federal Reserve’s Washington headquarters renovation as the pretext for alleging misconduct by the Fed chair.
• The Federal Reserve maintains the project was initiated in 2017 to address hazardous materials and outdated systems, and notes that criticized luxury elements were scrapped by 2021.
• U.S. Supreme Court precedent restricts presidential removal of a Fed chair to cases of proven wrongdoing, not disagreements over monetary policy.
• Reports of Powell’s potential dismissal unsettled markets, driving modest declines in U.S. and European equity indexes amid heightened uncertainty.