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Trump's influence on Fed policy may be limited

Trump's potential firing of Powell would not guarantee a shift in interest rates at the Federal Reserve.

July 16, 2025 at 03:11 AM

If Trump fires Powell and appoints a lackey as Chair, that is only one vote out of 12

Despite speculation, Trump's potential actions against Powell may not sway monetary policy significantly.

Trump's influence on Federal Reserve policy may be limited

If Trump were to fire Jerome Powell as Chair of the Federal Reserve, it would not guarantee a shift in interest rates. The Federal Open Market Committee (FOMC) consists of 12 voting members, all with equal voting power. The chair does hold significant influence but does not have extra votes. Monetary policy decisions rely on majority votes among all members, meaning Trump’s potential move could be more symbolic than substantive in changing rates. This structure is enshrined in federal law, thus any changes would require Congressional approval.

Key Takeaways

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Firing Powell would not ensure a rate cut

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Each FOMC member has one vote

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Policy decisions depend on majority votes

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The voting structure is protected by law

"Each FOMC member has exactly one vote"

This emphasizes the democratic structure of the Federal Reserve's decision-making process.

"The one-vote-per-member structure is enshrined in federal legislation"

This reinforces the stability of the Fed's voting system against political influence.

The potential for Trump to fire Powell raises questions about the influence of politics on economic policy. However, the equal voting system within the FOMC means that Trump's direct control over interest rates remains limited, ensuring that decisions are made collectively rather than unilaterally. This highlights the resilience of the Federal Reserve's structure against political pressures, serving as a safeguard for consistent monetary policy.