Trump suggests he can remove Fed Chair Powell and says he's 'not happy' with him over interest rates

WASHINGTON (AP) — President Donald Trump attacked Federal Reserve Chair Jerome Powell on Thursday for not cutting interest rates and said he could fire him if he wanted to, renewing a threat from his first term that could cause a major legal showdown over the issue of the central bank's long-standing political independence.

“If I want him out, he’ll be out of there real fast, believe me," Trump said in the Oval Office while taking questions from reporters during a visit with Italian Prime Minister Giorgia Meloni. “I'm not happy with him.”

Trump's comments followed a posting on his social media site in which the Republican president called on Powell to lower the Fed's short-term interest rate and said, "Powell’s termination cannot come fast enough!” The Fed chair's term ends in May 2026.

Powell was initially nominated by Trump in 2017 and was appointed to another four-year term by Democratic President Joe Biden in 2022. At a November news conference, Powell indicated he would not step down if Trump asked him to resign and, in remarks Wednesday, made clear that “our independence is a matter of law.” He added: “We’re not removable except for cause. We serve very long terms, seemingly endless terms.”

Trump's criticism stems from his view that, as he said Thursday, “we have essentially no inflation." The Fed sharply raised rates in 2022 and 2023 to slow borrowing and spending and tame inflation, which dropped steadily from a peak of 9.1% in 2022 to 2.4% last month. Inflation is not far from the Fed's target of 2%. The Fed even cut rates three times at the end of last year.

But since then, Powell and most other Fed policymakers have underscored that they are keeping rates on hold because of the uncertainty created by Trump's sweeping tariffs, including a 10% tax on all imports and a 145% levy on imports from China.

In remarks Wednesday in Chicago, Powell reiterated that the Fed was waiting for greater clarity before making any moves and said the tariffs would likely worsen inflation.

Powell has steadfastly maintained that the Fed is independent from politics, a stance that Fed chairs have stressed since at least the 1970s. Back then, the Fed was widely seen as worsening a 15-year run of high inflation by giving in to demands from President Richard Nixon to keep interest rates low in the run-up to the 1972 election.

Economic research has suggested an independent central bank is more likely to keep inflation in check because it is more willing to do unpopular things, such as lift interest rates, to fight rising prices. Wall Street investors also largely prefer an independent Fed, though the stock market did not appear to react to Trump's comments.

Powell said Wednesday that the Fed will base its decisions solely on what's best for all Americans.

“That’s the only thing we’re ever going to do,” Powell said. “We’re never going to be influenced by any political pressure.”

He also suggested that the central bank will focus on fighting inflation in the wake of the tariffs, which would likely mean they would keep rates elevated.

Trump complained that interest rates are still rising “because we have a Federal Reserve chairman that is playing politics.” Yet longer-term rates rose after Trump announced his trade penalties.

Trump and members of his economic team have said they would like longer-term interest rates to fall, which would make it cheaper for Americans to borrow to buy homes, cars and appliances. Yet the Fed controls a short-term rate and can only indirectly affect longer-term borrowing costs.

A case before the Supreme Court could make it easier for a president to fire top officials, such as the Fed chair, at independent agencies. At issue are two Trump firings, which the justice have let stand while they consider the case.

Powell said he is watching the case closely but that it might not apply to the Fed, given that the court has in the past carved out exemptions for the central bank. Lawyers for the Trump administration, seeking to narrow the focus of the case, have also argued that it does not involve the Fed.

In a 2024 campaign interview with Bloomberg News, Trump said he would allow Powell to serve out his term as chair. Earlier this month, Trump's top economic adviser, Kevin Hassett, said in a television interview that “there's not going to be any political coercion over the Fed, for sure.”

Powell started Trump’s second term in a relatively secure spot with a low unemployment rate and inflation progressing closer to the Fed’s 2% target, conditions that could have spared him from the president’s criticism.

But Trump’s tariffs have increased the threat of a recession with higher inflationary pressures and slower growth, a tough spot for Powell, whose mandate is to stabilize prices and maximize employment. With the economy weakening because of Trump’s moves, the president appears to be looking to pin the blame on Powell.

On April 2, Trump rolled out increased tariff hikes based off U.S. trade deficits with other nations, causing a financial market backlash that almost immediately led him to announce a 90-day pause.

Wall Street banks such as Goldman Sachs have raised their odds that a recession could start. Consumers are increasingly pessimistic in surveys about their job prospects and fearful that inflation will shoot up as the cost of the import taxes get passed along to them.

The Budget Lab at Yale University estimated that the increased inflationary pressures from the tariffs would be equal to the loss of $4,900 in an average U.S. household.

Associated Press journalist Sagar Meghani contributed to this report.

President Donald Trump speaks as he meets with Italy's Prime Minister Giorgia Meloni in the Oval Office of the White House, Thursday, April 17, 2025, in Washington. (AP Photo/Alex Brandon)

President Donald Trump listens as he meets with Italy's Prime Minister Giorgia Meloni in the Oval Office of the White House, Thursday, April 17, 2025, in Washington. (AP Photo/Alex Brandon)

President Donald Trump speaks as he meets with Italy's Prime Minister Giorgia Meloni in the Oval Office of the White House, Thursday, April 17, 2025, in Washington. (AP Photo/Alex Brandon)

President Donald Trump listens as he meets with Italy's Prime Minister Giorgia Meloni in the Oval Office of the White House, Thursday, April 17, 2025, in Washington. (AP Photo/Alex Brandon)

FILE - President Donald Trump speaks to reporters as he signs executive orders in the White House, Feb. 4, 2025, in Washington. (AP Photo/Evan Vucci, File)

Chair of the Board of Governors of the Federal Reserve System Jerome Powell speaks during an event hosted by the Economic Club of Chicago, Wednesday, April 16, 2025, in Chicago. (AP Photo/Erin Hooley)

Chair of the Board of Governors of the Federal Reserve System Jerome Powell speaks during an event hosted by the Economic Club of Chicago, Wednesday, April 16, 2025, in Chicago. (AP Photo/Erin Hooley)

Chair of the Board of Governors of the Federal Reserve System Jerome Powell speaks during an event hosted by the Economic Club of Chicago, Wednesday, April 16, 2025, in Chicago. (AP Photo/Erin Hooley)

Chair of the Board of Governors of the Federal Reserve System Jerome Powell speaks during an event hosted by the Economic Club of Chicago, Wednesday, April 16, 2025, in Chicago. (AP Photo/Erin Hooley)

RIYADH, Saudi Arabia (AP) — Crown Prince Mohammed bin Salman welcomed President Donald Trump to Saudi Arabia on Tuesday as the U.S. leader began a four-day Middle East tour.

Trump, as he did in his first term, is paying an early visit to the kingdom after the crown prince promised to pump hundreds of billions of dollars in new investments in the United States.

The U.S. administration said it intended to use the trip to launch economic agreements with the Saudis as well as the governments of Qatar and United Arab Emirates later this week.

But behind closed doors, the leaders of all three countries are aiming to get a bead on U.S. efforts to dismantle Iran’s nuclear program, end the war in Gaza, hold down oil prices and more.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

RIYADH, Saudi Arabia (AP) — President Donald Trump is opening his four-day Mideast trip on Tuesday by paying a visit to Saudi Arabia's de facto ruler, Crown Prince Mohammed bin Salman, for talks on U.S. efforts to dismantle Iran's nuclear program, end the war in Gaza, hold down oil prices and more.

The crown prince will fete Trump with a formal dinner and host a gathering of members of the Gulf Cooperation Council, which is made up of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Saudi Arabia and fellow OPEC+ nations have already helped their cause with Trump early in his second term by stepping up oil production. Trump sees cheap energy as a key component to lowering costs and stemming inflation for Americans. The president has also made the case that lower oil prices will hasten an end to Russia's war on Ukraine.

But Saudi Arabia's economy remains heavily dependent on oil, and the kingdom needs a fiscal break-even oil price of $96 to $98 a barrel to balance its budget. It's questionable how long OPEC+, of which Saudi Arabia is the leading member, is willing to keep production elevated. The price of a barrel of Brent crude closed Monday at $64.77.

“One of the challenges for the Gulf states of lower oil prices is it doesn’t necessarily imperil economic diversification programs, but it certainly makes them harder,” said Jon Alterman, a senior Middle East analyst at the Center for Strategic and International Studies in Washington.

Trump picked the kingdom for his first stop because it has pledged to make big investments in the U.S., but Trump ended up traveling to Italy last month for Pope Francis’ funeral. Riyadh was the first overseas stop of his first term.

The three countries on the president's itinerary — Saudi Arabia, Qatar and the United Arab Emirates — are all places where the Trump Organization, run by Trump's two elder sons, is developing major real estate projects. They include a high-rise tower in Jeddah, a luxury hotel in Dubai and a golf course and villa complex in Qatar.

Trump is trying to demonstrate that his transactional strategy for international politics is paying dividends as he faces criticism from Democrats who say his global tariff war and approach to Russia’s war on Ukraine are isolating the United States from allies.

He’s expected to announce deals with the three wealthy countries that will touch on artificial intelligence, expanding energy cooperation and perhaps new arms sales to Saudi Arabia. The administration earlier this month announced initial approval to sell $3.5 billion worth of air-to-air missiles for Saudi Arabia’s fighter jets.

But Trump arrives in the Mideast at a moment when his top regional allies, Israel and Saudi Arabia, are far from neatly aligned with his approach.

Ahead of the trip, Trump announced that the U.S. was halting a nearly two-month U.S. airstrike campaign against Yemen’s Houthis, saying the Iran-backed rebels have pledged to stop attacking ships along a vital global trade route.

The administration didn’t notify Israel — which the Houthis continue to target — of the agreement before Trump publicly announced it. It was the latest example of Trump leaving the Israelis in the dark about his administration’s negotiations with common adversaries.

In March, Israeli Prime Minister Benjamin Netanyahu wasn’t notified by the administration until after talks began with Hamas about the war in Gaza. And Netanyahu found out about the ongoing U.S. nuclear talks with Iran only when Trump announced them during an Oval Office visit by the Israeli leader last month.

“Israel will defend itself by itself,” Netanyahu said last week following Trump’s Houthi truce announcement. “If others join us — our American friends — all the better."

William Wechsler, senior director of the Rafik Hariri Center and Middle East Programs at the Atlantic Council, said Trump’s decision to skip Israel on his first Middle East visit is remarkable.

“The main message coming out of this, at least as the itinerary stands today, is that the governments of the Gulf ... are in fact stronger friends to President Trump than the current government of Israel at this moment,” Wechsler said.

Trump, meanwhile, hopes to restart his first-term effort to normalize relations between the Middle East’s major powers, Israel and Saudi Arabia. Trump’s Abraham Accords effort led to Sudan, the UAE, Bahrain and Morocco agreeing to normalize relations with Israel.

But Riyadh has made clear that in exchange for normalization it wants U.S. security guarantees, assistance with the kingdom’s nuclear program and progress on a pathway to Palestinian statehood. There seems to be scant hope for making headway on a Palestinian state with the Israel-Hamas war raging and the Israelis threatening to flatten and occupy Gaza.

Bin Salman last week notably hosted Palestinian Vice President Hussein Sheikh in Jeddah on the sheikh’s first foreign visit since assuming office in April.

Hussain Abdul-Hussain, a research fellow at the Foundation for Defense of Democracies, said the crown prince appeared to be subtly signaling to Trump that the kingdom needs to see progress on Palestinian statehood for the Saudis to begin seriously moving on a normalization deal with the Israelis.

“Knowing how the Saudis telegraph their intentions, that’s a preemptive, ‘Don’t even think of asking us to show any goodwill toward normalization,’” Abdul-Hussain said.

Trump says he will decide during the trip how the U.S. government will refer to the body of water now commonly known as the Persian Gulf. He told reporters that he expects his hosts will ask him about the U.S. officially calling the waterway the Arabian Gulf or Gulf of Arabia.

Abbas Aragachi, the Iranian foreign minister, has warned that changing how the U.S. refers to the waterway would compel the “wrath of all Iranians from all walks of life and political persuasion in Iran, the U.S. and across the world.”

President Donald Trump, left, speaks with Saudi Arabia's Crown Prince Mohammed bin Salman during family photo session at G-20 leaders summit in Osaka, Japan, June 28, 2019. (Kim Kyung-Hoon/Pool Photo via AP, File)