Trump Set to Remove Powell? July Interest Rate Cut May Be Imminent

Trump Eyes Fed Chair Replacement: Could It Trigger Rate Cuts and Crypto Volatility?

A fresh wave of political tension is rippling through Washington and Wall Street, as former U.S. President Donald Trump signals his intent to replace Federal Reserve Chair Jerome Powell well before his term expires in 2026. The implications of this power play extend far beyond the Fed’s boardroom—potentially shaking up interest rate policy, inflation management, and even the trajectory of the cryptocurrency market.

With Trump's return to political prominence in 2025, speculation is mounting that the next economic shift may come not from the Federal Reserve itself, but from the top-down pressure being applied to it.

Trump-Powell Clash Escalates

Jerome Powell, the man appointed to lead the Federal Reserve through some of the most turbulent years in recent economic history, is now facing what could be his most unexpected challenge yet: early replacement talks from the former president. Although Powell’s term is set to expire in May 2026, Donald Trump confirmed in June 2025 that he is actively interviewing candidates to potentially succeed him.

The announcement came after Trump’s blunt remarks on Truth Social, where he labeled Powell a “moron” and accused him of damaging the economy with his “incompetent” policies. The feud isn’t new—Trump has publicly criticized Powell before—but the latest statements, coupled with an ongoing selection process, suggest a more serious intent to upend the Fed’s leadership.

This development has raised alarm bells in financial and crypto circles alike, with some speculating that the threat of Powell’s removal is intended to force the Fed's hand into cutting interest rates sooner than planned.

The List of Potential Successors

Although no official candidate has been confirmed, a few prominent names are already making the rounds in financial media and insider reports. According to a recent post by Litquidity Capital, one controversial candidate under consideration is Bill Hwang—the hedge fund executive linked to the Archegos Capital Management collapse in 2021.

Source: Truth

Additional names rumored to be on Trump’s shortlist include:

• Kevin Warsh, former Federal Reserve Governor

• Kevin Hassett, former Chair of the Council of Economic Advisers

• Christopher Waller, current Fed Governor

• Scott Bessent, former Treasury advisor during Trump’s administration

While each brings unique experience, critics argue that the mere suggestion of replacing the Fed Chair mid-term risks undermining the central bank’s independence—a principle historically protected by law and precedent.

Can a President Replace the Fed Chair Early?

Legally, replacing a sitting Federal Reserve Chair before the end of their term is extremely difficult. The Fed was designed to be independent of political influence, and a 1935 Supreme Court ruling reinforced this protection by limiting executive overreach into the central bank's governance.

Nonetheless, Trump doesn’t appear to be aiming for a direct removal—at least not yet. Analysts suggest that his current maneuver may be more strategic: by floating the possibility of a replacement, he’s sending a clear message to Powell and the markets that the status quo is no longer acceptable.

Why This Matters for Rate Cuts and Markets

At the heart of the controversy lies one key issue: interest rates.

The Federal Reserve has held rates steady amid concerns over lingering inflation and economic overheating. Powell has repeatedly stated that rate cuts are not on the immediate horizon, citing “economic resilience” and the ongoing need to manage inflationary pressures.

However, Trump's public criticism and suggestion of a potential successor have changed the conversation entirely. Market analysts are now revisiting their predictions for the upcoming July 2025 Federal Open Market Committee (FOMC) meeting, with some speculating that the odds of a surprise rate cut may be climbing.

Source: X

“This isn’t just about Powell,” said Dr. Elise Romero, an economist at Brookstone Analytics. “It’s about signaling to the markets that Trump wants lower interest rates—and soon. That changes expectations.”

Crypto Market in the Crossfire

The ripple effects extend beyond traditional markets. Cryptocurrencies, which have long shown sensitivity to interest rate changes, are particularly vulnerable to shifts in Fed policy. A sudden cut in rates could cause:

• A short-term rally in Bitcoin and altcoins, driven by the appeal of risk assets

• Increased volatility in trading volumes as speculators react to changing monetary signals

• Renewed debates over the role of crypto as an inflation hedge

Conversely, continued uncertainty about Fed leadership and monetary stability could dampen investor confidence and send crypto prices into a tailspin.

“Markets hate uncertainty,” said Clara Yeh, head of research at TokenMetrics. “And what we’re seeing now is a power play with unpredictable consequences.”

A Political Game or Economic Strategy?

While the legal and political roadblocks to removing Powell are considerable, Trump’s strategy may not depend on actual removal. Instead, it may be designed to apply enough pressure on the Fed to pivot toward more accommodative policies—particularly ahead of key economic and political milestones.

Trump has made no secret of his preference for low interest rates and weaker monetary tightening, especially as economic indicators show signs of slowing growth in the second half of 2025. If he can influence Powell’s decisions without formally removing him, it may serve his agenda just as effectively.

Still, some experts warn that politicizing the central bank risks damaging the institution’s credibility.

“The Fed’s independence is its most valuable asset,” said Mark Ellison, a professor of public finance at Columbia University. “Undermining that—even rhetorically—could have long-lasting effects on inflation expectations, bond markets, and the dollar.”

What Traders and Investors Should Watch Next

With the financial world now closely watching every move, there are several key events that could signal what comes next:

• The July 2025 FOMC Meeting: Any surprise move on rates will be seen as a response to mounting political pressure.

• Public Statements from the White House: Further comments from Trump or his economic team could shift market sentiment quickly.

• Shortlist Confirmation: If the administration releases an official list of potential replacements, expect heightened volatility.

• Crypto Price Movements: Watch for surges in Bitcoin, Ethereum, and top altcoins as traders anticipate rate policy changes.

Conclusion: A Shake-Up in the Making

Whether or not Jerome Powell is ultimately replaced, the pressure campaign itself is already reshaping market expectations. Investors are recalibrating for a future where politics may once again exert heavy influence over the Federal Reserve—something the institution has tried hard to avoid for decades.

For now, traders and analysts must navigate a complex landscape of policy uncertainty, shifting rhetoric, and cross-asset volatility. As Trump continues to reshape the narrative, one thing is certain: the Fed Chair drama is no longer just a Washington story—it’s a global market event.

Disclaimer

The content published on nyohoka.com is for informational and educational purposes only. We do not recommend making financial, investment, or any other decisions based solely on the articles on this site. Always do your own research and consult with a professional before making any decisions.