Elizabeth Warren warns of a stock-market crash if Trump can fire Jerome Powell

• Sen. Elizabeth Warren warned that President Trump firing Jerome Powell could crash the US stock market.
• Trump rekindled his feud with Powell on Thursday, calling him out for not cutting interest rates.
• Warren emphasized that the Fed's independence is crucial for global economic stability.

Sen. Elizabeth Warren warned on Thursday that if President Trump fires Fed Chair Jerome Powell, it could trigger a crash in the US stock market.

The comments came in response to a social-media post from earlier in the day in which Trump said Powell's "termination cannot come fast enough," while also calling out his lack of action on interest-rate cuts.

"I have tangled with [Powell] on a regular basis about both regulations and interest rates," Warren said in comments made at the New York Stock Exchange. "But understand this: If Chairman Powell can be fired by the president of the United States, it will crash markets in the United States."

Thursday's flare-up is far from the first time Trump has questioned Powell's decisions and raised question marks about his future as Fed chair. The two have a long, checkered history of public disagreements, dating back to Trump's first term.

Why Warren is so worried

For Warren, it's a crucial situation not just because an attempted firing of Powell would technically be illegal, but also because it would violate the sanctity of Fed independence.

"The infrastructure that keeps this stock market strong and therefore a big part of our economy strong and therefore a big part of the world economy strong, is the idea that the big pieces move independent of the politics," Warren said during her comments at the NYSE.

She added: "If interest rates in the United States are subject to a president who just wants to wave his magic wand, this doesn't distinguish us from any other two-bit dictatorship around the world."

The question of Trump firing Powell before his termination ends is lingering, aside from Trump's directed comments at Powell, because Trump recently fired board members of independent agencies.

The Supreme Court is set to rule on whether those firings were legal later this year.

Powell has remained firm in his view that he cannot be fired by the President.

During the Fed's FOMC meeting in November, Powell responded to a reporter that his early firing by a president is "not permitted under the law."

In December, Trump told NBC that he didn't have plans to fire Powell.

"No, I don't think so, I don't see it. But I think if I told him to he would, but if I asked him to he probably wouldn't, but if I told him to he would," Trump said.

Trump has a history with Powell

Even during his first term, Trump criticized Powell for not cutting interest rates to lower levels.

In October 2019, the Fed cut interest rates by 25 basis points to a range of 1.75% to 2%, but said it was likely nearing the end of its rate cuts.

"Jay Powell and the Federal Reserve Fail Again," Trump tweeted in response to Powell at the time. "No 'guts,' no sense, no vision!"

After cutting interest rates 100 basis points during the final months of 2024, Powell has kept rates on hold, mainly due to concerns about a potential rebound in inflation.

On Wednesday, Powell told the Economic Club of Chicago that the Fed will likely continue to keep interest rates unchanged until it better understands the impact of Trump's tariffs on inflation and the broader economy.

According to the CME's FedWatch Tool, markets expect the Fed to cut interest rates by 25 basis points at its June FOMC meeting and by 100 basis points overall by the end of the year.