CNN
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President Donald Trump’s attacks on Federal Reserve Chairman Jerome Powell are so commonplace at this point that they barely register in financial markets these days. The rapidly intensifying multi-pronged efforts by Trump’s advisers to amplify and expand on Trump’s attacks are a good reason to rethink that indifference.
White House advisers are now unequivocally engaged in a coordinated effort to dramatically ramp up the pressure on Powell in public statements and through bureaucratic moves designed to give Trump more leverage.
That leverage, sources say, isn’t designed to trigger Powell’s removal – at least not at the moment.
But with Trump’s frustration over the Fed’s refusal to bow to his pressure to lower rates growing by the day, it is the most consequential step taken thus far to bring that threat to Powell’s doorstep.
It also serves as the clearest window into the expanding effort to change Powell and the Federal Open Market Committee’s insistence on independence. Just three weeks, Trump candidly acknowledged his attempts had failed.
“I call him every name in the book trying to get him to do something,” Trump said, expressing bewilderment over Powell’s impervious response to his powers of persuasion. “I do it every way in the book. I’m nasty. I’m nice. Nothing works.”
Trump’s advisers are now showing they aren’t giving up.
The speed with which the campaign against Powell escalated on Thursday was equal parts jarring and foreseeable for a White House that has approached Trump’s second term with a maximalist view of executive authority and a granular understanding of the statutory and bureaucratic tools to further that view.
Office of Management and Budget Director Russell Vought triggered that sequence with a letter to Powell, which he posted publicly on social media, suggesting Powell may have broken the law in his stewardship of a planned renovation of the Fed’s headquarters.
Vought’s letter cites Powell’s congressional testimony last month and its connection to the National Capital Planning Act, which requires renovation projects to be approved by the National Planning Commission.
Vought’s letter coincided with a quiet move to replace three members of that planning commission with loyalists, a source told CNN, all of whom were sworn in ahead of the commission’s meeting Thursday evening.
The moves carry the hallmarks of a familiar playbook utilized by Trump and his top political aides over the course of the last decade.
It starts with a little noticed allegation of malfeasance leveled by Capitol Hill allies against an opponent, which is then seized upon, amplified and then utilized as the basis of an investigation that at the very least can be utilized to delegitimize or serve as the basis for more consequential action.
The central involvement of Vought, who is viewed as one of Trump’s most loyal, knowledgeable and deeply effective lieutenants, represents an escalation in and of itself.
“I think political appointees have to be really aggressive in going back to underlying statutes to see what is possible,” Vought said in an interview last year on the podcast Statecraft in what he described as one of his governing philosophies. “It should not merely be a matter of preserving the status quo or asking Capitol Hill, ‘Mother, may I?’ The president has to manage his political capital, but you need to give him options consistent with the law.”
White House officials say there isn’t an active effort underway to try and remove Powell, a long-standing Trump fixation that advisers have dissuaded him from pursuing due to significant concerns over legal constraints and market reaction.
Those concerns haven’t diminished, particularly in the wake of a Supreme Court ruling in May underscoring Trump’s power to remove executive officials. The court, however, explicitly made the point that Trump’s authority did not extend to the Federal Reserve, which it described as a “uniquely structured, quasi-private entity” warranting special independence.
The more acute risk – and, sources say, the primary reason for Trump’s reticence to act against Powell – is the expectation that any move would immediately trigger a significant market sell-off.
The inevitable lengthy, complex and fraught legal battle that would play out given Powell’s position that he would fight any removal in court, would likely consume a stable and resilient US economy for months.
“If there were an effort by the president to remove the chair, the market reaction would be very significant — well before any court had an opportunity to pass on the issue,” former Fed Governor Daniel Tarullo said in an April interview with Harvard Gazette. “The anticipated market effect is a disincentive to try to remove the chair, no matter how unhappy the administration may be with his policies.”
While some Trump advisers – including Vought prior to this administration – have questioned the statutory basis for the Fed’s independence, there is a clear sensitivity within the administration about the market response.
That sensitivity was underscored by one of Trump’s most consequential actions to expand his own authority: an executive order placing government agencies long viewed as independent explicitly under his purview.
Buried within that order was a critical caveat: “This order shall not apply to the Board of Governors of the Federal Reserve System or to the Federal Open Market Committee in its conduct of monetary policy.”
That reality hasn’t changed, officials say, which underscores the extent to which the latest moves are more about leveraging pressure on both Powell and the other voting members of the Federal Open Market Committee.
“We’re aware Powell doesn’t make the decision on his own,” an administration official told CNN last week. “Our view is that voting members have the responsibility to look at the data regardless of his view – and we think the data supports our case.”
That position has been bolstered by the ongoing race to replace Powell, whose term as chair is up next year.
Kevin Warsh, who people familiar with the matter is one of the three candidates viewed as most likely to get the nod from Trump, argued this week on Fox Business Network that tariffs are not inflationary and that the US economy was being held back by “bad economic policies coming from the central bank.”
Kevin Hassett, Trump’s National Economic Council Director and another top candidate, has made similar arguments based on economic data. Ironically, it was Hassett, in his role as the chairman of the Council of Economic Advisers in Trump’s first term, who played an integral role in convincing Trump not to fire Powell after quietly researching the question with White House lawyers.
“We found that it may not have been possible for the president to fire him and told him in the Oval Office,” Hassett wrote in his memoir of his time in the first Trump administration. “We could maybe fire him as chairman, but he would be able to stay on as a member of the board. The other members could decide to treat him as chairman, and that would be as far as matters could go.”
While Trump’s anger over Powell, who he selected for chair in his first term, is longstanding, the aggressive public attacks on his policy views had been primarily his own.
But the frustration Trump candidly acknowledged last month over his ineffective one-man, one-sided rhetorical warfare against Powell appeared to immediately spark his allies to join the fight.
“The president has been saying this for a while, but it’s even more clear: the refusal by the Fed to cut rates is monetary malpractice,” Vance wrote in a post on X shortly after Trump’s comments.
Bill Pulte, the director of the Federal Housing Finance Agency who had been sharply critical of the Fed chair for weeks, called on Powell to resign a few hours after Trump’s remarks.
The effort has grown more intense in the last week.
Peter Navarro, one of Trump’s longest serving advisers and senior counselor for trade and manufacturing, published an opinion column in The Hill newspaper headlined “Jay Powell is competing to be the worst Fed chair in history,” and then proceeded to appear on Newsmax, Scripps, CNBC and Fox Business to discuss the piece.
Navarro’s appearance on TV is always noted on Wall Street – his role as Trump’s most hawkish trade adviser often signals a harder line on tariff policy from the administration. But Navarro repeatedly made clear he didn’t want to focus on tariffs and had no intention of getting in front of the president on the issue.
He wanted to talk about Powell.
Commerce Secretary Howard Lutnick, asked about Powell on Newsmax, wasn’t subtle either.
“He’s got to change and he’s got to go,” Lutnick said. That statement in past administrations would’ve been extraordinary for a cabinet official.
It barely registered this week.
The ultimate goal, however, isn’t about Powell’s removal, advisers say. Instead, it’s about driving the message and pressure on Fed board members ahead in the lead up to their next meeting.
It’s a strategy best captured by Treasury Secretary Scott Bessent, who is Trump’s top economic adviser and a critical messenger to Wall Street and foreign investors.
Bessent, in an interview on Fox News Sunday on July 6th, pointed to the differing approach of two legendary college basketball coaches to explain Trump’s approach.
“There’s the Bobby Knight school and the Dean Smith school,” Bessent said, citing the fiery former Indiana University coach and more refined and controlled University of North Carolina legend. “Obviously the president is in the Bobby Knight school and I will tell you, Bobby Knight won 3 national championships and Dean Smith only won 2, so working the refs seems to be effective.”
CNN’s Kristen Holmes contributed to this report.
