Trump threatens to fire Fed Chair Powell, backs Warsh amid DOJ probe
Donald Trump told FOX Business he will fire Federal Reserve Chair Jerome Powell in May if Powell does not step down. Trump said he has “held back” but believes Powell is incompetent, raising fresh uncertainty over Federal Reserve independence.
Trump also backs Kevin Warsh as Powell’s replacement. Warsh’s Senate confirmation faces rising scrutiny, including opposition from Sen. Thom Tillis until the DOJ inquiry into Powell is fully resolved and transparent.
A separate legal dispute is escalating the political fight. Prosecutors linked to Jeanine Pirro’s office reportedly visited the Fed’s $2.5 billion headquarters renovation site without notice to inspect construction and seek access. The Fed’s outside counsel, Robert Hur, objected, citing a prior court ruling that said the investigation appears intended to “harass and pressure” Powell over rate cuts or resignation.
The Senate Banking Committee scheduled Warsh’s confirmation hearing for April 21. Chair Tim Scott expects a quick resolution but said he has no evidence.
For crypto traders, the key risk is heightened Federal Reserve leadership uncertainty. Expectations for rate cuts can quickly reprice USD liquidity, bond yields, and risk sentiment, increasing short-term volatility even if longer-run narratives remain unchanged. Federal Reserve headlines like this often matter more for near-term positioning than for long-term fundamentals.
Bearish
This news increases perceived Federal Reserve independence risk and raises legal uncertainty around Jerome Powell, with a possible leadership transition to Kevin Warsh. Even if an immediate rate move is not certain, the threat of removing Powell and the expanding DOJ/Fed court fight can quickly shift rate-cut expectations.
For crypto, that typically translates into short-term risk-off behavior: tighter or more volatile dollar/liquidity conditions and changing bond yields can pressure high-beta assets. In the longer run, fundamentals may still hold, but the market is likely to trade this primarily as a macro volatility catalyst, worsening near-term sentiment.