Wall Street slips on an imminent Powell resignation chatter

 

·    The Trump admin may be plotting a coordinated strategy to force Powell to an early resignation over the Fed’s $2.5B HQ renovation project controversy

·         Trump needs an immediate lower borrowing costs desperately to refinance $9T of public debt (US TSYs) at lower borrowing costs by later this year

·         Trump is seeking 300 bps rate cuts in H2CY25 against the Fed’s present plan of 50 bps

·         Wall Street may slide on Trump’s EU tariff threat of 30% (against 10% expectations) and any sudden resignation by Fed Chair Powell

On Friday, July 11, 2025, Wall Street slips in the last hour of trading on a rumor that Fed Chair Powell may resign within the next few days, even before the Fed blackout period starting from July 20. The FOMC meeting is scheduled for July 29-30. On late Friday, the Chair of the board of Fannie Mae and Freddie Mac, William J. Pulte, claimed Federal Reserve (Fed) Chair Powell is considering leaving his position at the Fed soon. Pulte said in a statement published on the official website of the Federal Housing Finance Agency (FHFA): "I'm encouraged by reports that Jerome Powell is considering resigning. I think this will be the right decision for America, and the economy will boom”.

On July 12, the FHFA Chief Pulte again tweeted in a bid to clarify his comments:

·         America wants Fed Chairman Jerome Powell to resign. Mr. Powell, do the patriotic thing and step down now.  You’ve done enough damage to the middle class.

·         I also personally was in a meeting with Jerome Powell last month, and he looked completely drained of life.

·         He was not happy with me when we shook hands, but he wasn’t as angry as the many Americans who unnecessarily have their interest rates high because of him.

·         The patriotic thing for Jerome Powell to do is to resign.

·         In addition to multiple reports, back to early June & DC reports, I spoke with someone who just met with Jerome Powell and said he is “EXTREMELY tired of the criticism”, “looked terrible”, and is “beleaguered.

Trump also joined Pulte and slammed Fed Chair Powell for costing the US a TON of money by keeping interest rates too high: "We should be 3 points lower! We should be number 1, and we're not, because of Jerome Powell. I am with @Pulte on this. He must RESIGN.”

The Trump administration is pressuring Fed Chair Powell to resign. President Trump has publicly and repeatedly insulted Powell, calling for his immediate resignation and citing disagreements over interest rate policies. Although Powell/Fed is set to cut rates from September’25 by 25 bps, followed by another 25 bps in December’25, Trump has advocated for a more aggressive approach, suggesting a reduction in interest rates by as much as "three percentage points."; i.e., 300 bps in the next three meetings starting from July’25.

Trump’s Statements: Trump has called Powell “Too Late” and demanded he resign immediately, notably in Truth Social posts and during a July 8, 2025, Cabinet meeting, linking Powell’s resignation to the need for lower interest rates.

Trump posted on his Truth on July 10: “Too Late” DEMEANS THE GREAT CREDIT OF THE USA. We are now, again, the Number One Credit in the World! “Gigantic Comeback”; The Fed Rate should be reflective of this. We should be at the top of the list!!! LOWER THE RATE!!!

Powell warned that Trump’s tariffs could fuel inflation, complicating rate-cut decisions. He stated that future trade deals might allow the Fed to consider rate cuts, but no immediate cuts were signaled for July. Powell emphasized that the Fed’s rate path projections are not held with strong conviction, reflecting uncertainty due to Trump’s economic policies. Powell also stressed that the Fed works on the future outlook, not present data; if there are no Trump tariff threats, the Fed has no problem in cutting rates from Q1CY25 itself. But the Fed is on hold considering unpredictable Trump tariff policies and constant flip-flops. These statements highlight Powell’s resistance to rapid rate cuts, a key point of contention with Trump’s agenda.

On July 9, Trump posted:  “I brought down costs more than any President in recorded history. The Crooked Democrats are using the opposite narrative, even though they know it is a total LIE. Remember this when you hear their phony soundbites. MAGA!!! ANYBODY BUT “TOO LATE.” Our Fed Rate is AT LEAST 3 Points too high. “Too Late” is costing the U.S. 360 Billion Dollars a Point, PER YEAR, in refinancing costs. No Inflation, COMPANIES POURING INTO AMERICA. “The hottest Country in the World!” LOWER THE RATE!!!”

President Trump criticized Powell on Truth Social, calling him “terrible” and reiterating demands for his resignation, particularly over Powell’s refusal to cut interest rates. This is part of a pattern of public attacks, including Trump’s support for a congressional probe into alleged misconduct regarding the Fed’s $2.5 billion headquarters renovation. 

Overall, now there is a concerted effort since the mid-June Congressional testimony, where Powell was alleged to misled the Capitol Hill (US Congress) about the Federal Reserve’s headquarters renovation project involving $2.5B, which Powell termed as ‘not substantial’, while critics termed the project as ‘Taj Mahal’ of America and the highest Federal spending for a Federal building in the history. Trump admin’s bureaucratic moves, like replacing National Capital Planning Commission members to scrutinize the Fed’s renovation project, also indicate a synchronized anti-Powell campaign.

Some influential Republican lawmakers said:

·         In section 3.4.1, Proposed Design Principles of the Federal Reserve Renovation Project Plans submitted to the National Capital Planning Commission in 2021, the first principle is that the new additions should be “modest & restrained.”

·         Hard to imagine how any $2.5B+ government building could qualify as “modest and restrained”. The Fed project is 30% over the original budget & growing, and at least 150% of the cost of the U.S. Capitol in today’s dollars.  For reference, the Capitol has 5x the sq ft & staff count.

On July 11, the White House Director of Staff said on Fed Chair Powell: "He was too late to recognize inflation and now he's too late to lower rates."

Synchronized anti-Powell comments by Trump allies and officials

Anti-Powell Comments by Kevin Hassett: Kevin Hassett, Director of the National Economic Council, has been vocal in criticizing Powell, particularly regarding the Federal Reserve’s interest rate policies and Powell’s leadership. On June 25, 2025, Hassett suggested Powell’s actions align with progressive agendas, stating, “If the Fed respects its independence, then it should pay attention to what Republicans are saying about Jay Powell--- policy actions suggest that he’s a person who’s doing basically whatever it is that Elizabeth Warren wants him to do.” This implies Powell’s monetary policy (maintaining high interest rates) is politically biased and misaligned with Trump’s economic goals

On April 19, 2025, Hassett told reporters the White House was exploring ways to fire Powell despite legal protections, saying, “The president and his team will continue to study” if Powell can be removed. He criticized Powell’s leadership, accusing the Fed of raising rates as soon as Trump took office, suggesting deliberate opposition to Trump’s agenda.

In a July 2025 interview, Hassett declined to defend Powell when Trump intensified attacks, indicating a shift from his first-term stance, where he called Powell “100 percent safe.” He argued the market context differed then, implying Powell’s current policies are more damaging

Succession Comments: Hassett has been linked to discussions about replacing Powell, with reports indicating he met Trump twice in June 2025 to discuss the Fed chair role. While he reportedly expressed disinterest in the position himself, he stated, “I think the president will choose the person that he likes, and it’s not going to be Jay Powell,” signaling support for Trump’s push to oust Powell.

Anti-Powell Comments by Peter Navarro: Policy hawk Peter Navarro, a senior Trump admin trade adviser, has been one of Powell’s most outspoken critics, focusing on Powell’s refusal to cut interest rates and his perceived misunderstanding of Trump’s economic policies:

Economic Damage Claims:

On July 7, 2025, Navarro publicly criticized Powell’s policy of holding interest rates steady, stating it “exacerbated risks to the economy” and was “inflicting serious damage” by causing “lost revenue” and “higher interest payments,” leading to “acute financial pain” for Americans. He called for the Fed Board to intervene against Powell’s stance.

On July 8, 2025, Navarro laid the groundwork to blame Powell for a potential economic slump, saying, “He doesn’t understand Trumpnomics. He doesn’t understand the supply-side aspects of tax cuts and deregulation. And he doesn’t have a clue about tariffs.” This suggests Powell’s monetary policies are out of sync with Trump’s growth-oriented agenda.

Personal Attacks: On July 10, 2025, Navarro reportedly called Powell “the worst Fed chair in history” and demanded immediate rate cuts during a public appearance, intensifying personal criticism. Navarro’s comments align with his role as a hardline tariff advocate, viewing Powell’s caution on rate cuts as undermining Trump’s trade and economic strategy. His absence from key tariff discussions on April 9, 2025, suggests his influence may be waning, but his anti-Powell rhetoric remains aggressive to get Trump’s attention.

Navarro:

·         Powell: A Political Animal

·         If prices rise on lower rates, just put it in reverse

·         Powell at Least 50bp Above Where We Should Be

Anti-Powell Comments by Scott Bessent: Treasury Secretary Scott Bessent has taken a more measured but still critical stance on Powell, balancing his role as a market-friendly figure with Trump’s push to replace the Fed chair:

Criticism of Fed Policy: In July 2025, Bessent criticized the Fed’s cautious approach, comparing it to “an old person who is afraid of falling after having stumbled once” and mocking concerns about tariff-driven inflation as “tariff derangement syndrome.” These remarks suggest his perceived notion that Powell’s inflation fears are exaggerated and hinder rate cuts.

In an October 2024 Barron’s interview (before his Treasury role), Bessent proposed a “shadow Fed chair” to undermine Powell’s influence, stating, “Based on the concept of forward guidance, no one is going to care what Jerome Powell has to say anymore.” He later walked back these comments but didn’t retract the underlying sentiment.

Succession and Role in Pressure Campaign: On July 3, 2025, Bessent addressed Powell’s future on Fox Business, saying, “I will go where the president thinks that I am best suited,” when asked about replacing Powell. He highlighted the need for the Fed to control spending, implying Powell’s management (e.g., the $2.5 billion headquarters renovation) is wasteful. Bessent noted the administration’s plan to fill two Fed governor seats in 2026, signaling a strategy to shift the Fed’s composition toward Trump’s preferences. He maintained a diplomatic tone, mentioning weekly breakfasts with Powell (not usual Lunch) and “mutual respect,” but his comments align with Trump’s push for a new Fed chair.

On April 17, 2025, Bessent reportedly cautioned Trump privately about the market risks of firing Powell, showing restraint compared to Navarro’s aggressive rhetoric. However, his public statements support Trump’s goal of replacing Powell with a less hawkish tone, but aligning with the broader Trump strategy.

Recent Anti-Powell Comments by Larry Kudlow: Kudlow, a Fox Business host, trusted Trump ally, and former National Economic Council Director under Trump 1.0, has been vocal in his criticism of Powell, particularly regarding the Federal Reserve’s reluctance to cut interest rates and its handling of economic policy.  Kudlow has consistently criticized Powell’s reluctance to cut rates. His recent anti-Powell campaign and comments likely reflect Trump’s agenda, which includes public attacks & insults on Powell. Kudlow’s media remarks suggest Powell’s resignation may be imminent.

Criticism of Powell’s Rate Policy (July 9, 2025): On *The Big Money Show* on Fox Business, Kudlow slammed Powell for not cutting interest rates, stating, “What are we doing?” He expressed frustration with the Fed’s decision to maintain rates at 4.25%–4.5%, arguing that lower rates are needed to support economic growth, especially in light of Trump’s tariff-driven agenda. This aligns with Trump’s push for immediate rate cuts to offset potential stagflation from tariffs. Kudlow’s critique reflects his broader view that Powell’s cautious approach is misaligned with the administration’s perceived pro-growth policies, echoing sentiments from Hassett and Navarro about the Fed’s failure to support Trump’s economic vision.

Questioning Powell’s Tenure (July 12, 2025): In a July 11, 2025, radio broadcast on 770AM, Kudlow suggested Powell might be “on the way out,” questioning whether there is “just cause” to fire him. He referenced allegations of financial mismanagement, specifically the Fed’s $2.5 billion headquarters renovation, as potential grounds for Powell’s resignation or removal. Kudlow escalated this narrative on Fox Business, asking, “Can Jay Powell make it through the weekend?” He cited FHFA Director William Pulte’s claim that Powell is considering resigning and highlighted the Fed’s financial troubles, including a $1.1 trillion underwater bond portfolio and operating losses, comparing it to the Silicon Valley Bank collapse. Kudlow suggested these issues could constitute “sufficient cause” for Powell’s forced resignation or firing by Trump.

Criticism of Fed Groupthink (June 20, 2025): Kudlow accused Powell and the Fed of suffering from “groupthink,” a “bureaucratic disease,” for refusing to cut rates due to fears of tariff-driven inflation. He argued that recent data contradicts Powell’s inflation concerns, stating, “Tariff inflation has been missing in action.” He criticized Powell for not acknowledging that consumers might offset higher prices from tariffs by spending less elsewhere, keeping the overall price index flat

Kudlow also questioned the absence of dissent from Trump-appointed Fed Governors like Miki Bowman and Christopher Waller, asking, “Where is some diversity of thought?” This indirectly critiques Powell’s leadership and suggests the FOMC is complicit in his errors, though it stops short of explicitly calling for their replacement. Kudlow also questioned the political affiliation (socialist minded) of most of the regional Fed governors, appointed by the Democratic admin.

On May 31, 2025, Kudlow reported that Trump “took Fed head Jerome Powell to the woodshed” in an Oval Office meeting, criticizing Powell’s refusal to lower rates despite inflation being close to the Fed’s 2% target. He argued Trump was right to push for rate cuts, questioning why Powell wasn’t signaling policy easing.

These comments align with the Trump administration’s strategy, as seen with Hassett, Navarro, and Bessent, to amplify pressure on Powell by framing him as incompetent or obstructive. But Trump again made it clear on July 12 that he is not going to fire Trump; if he resigns, he will accept it gladly. On March 20, 2025, Kudlow briefly praised Powell for dismissing tariff-driven inflation fears as “transitory,” but this was an exception to his broader critical stance, as he quickly reverted to questioning Powell’s policies.

Broader Administration Strategy: Kudlow’s comments, alongside those from Hassett (e.g., exploring legal removal options), Navarro (e.g., calling Powell the “worst Fed chair”), and Bessent (e.g., planning for a 2026 successor), reflect a coordinated effort to pressure Powell. Actions like replacing National Capital Planning Commission members and probing the Fed’s renovation budget (mentioned in your July 4, 2025, query) aim to create a hostile environment, but Powell’s resolve and legal protections suggest he will hold firm.

Is Powell’s resignation imminent?

Various reports are suggesting that Fed Chair Powell may be considering an imminent resignation amid mounting political pressure by Trump admin and various Trump allies over not only hawkish monetary policy, but also Fed’s $2.5B HQ lavish (luxurious) renovation project despite Fed in deep MTM loss and Trump’s austerity stance for Federal spending. The FHFA Chair Bill Pulte publicly claimed Powell is thinking about stepping down, without providing any direct evidence or sources.

However, till now, neither Powell nor the Fed has confirmed any such move by Powell. But Powell may also do that or even resign just before the start of the Fed’s blackout period ahead of the July 29-30 FOMC meeting. If that happens, it would be unprecedented and disastrous for the market, at least initially. Powell’s term as Fed Chair runs through May 2026; legally, he cannot be dismissed for mere policy differences, and there’s no sign he plans to leave early, but Trump admin is also using the 2021 Biden admin approved Fed’s HQ renovation project as a political tool to embarrass Powell, for which he may also resign even before July Fed meeting.

The Fed HQ renovation controversy is a focal point for Trump administration allies, including Pulte, Kudlow, Hassett, Navarro, and Bessent. They allege mismanagement or deceptive testimony by Powell, as seen in Pulte’s call for a congressional probe (July 2025). The administration’s replacement of three National Capital Planning Commission members with Trump loyalists (July 2025) suggests a coordinated effort to amplify pressure on Powell to resign for non-monetary policy issues. The Fed HQ renovation issue appears to be a pretext to undermine Powell, as legal removal “for cause” requires more than policy disputes or budgetary issues.

Conclusions

Powell’s resignation will be a sad day for the Central Bank's independence. The US institutional and Fed credibility will be at stake. The US rating may be downgraded further. Whoever may be the next Fed Chair, be it Waller or Hassett, he will be seen as a ‘yes man’ of Trump and Fed policy may be driven by politics, not economics. The allegations of misconduct (e.g., renovation costs) appear to be a pretext to justify pressure, as the Fed operates independently with its budget and authority. 

Although the Fed is now in deep MTM loss for lower bond prices and reverse repo interest payment to banks, these are all transient. The Trump administration’s anti-Powell strategy—public attacks, renovation projects controversy, and National Capital Planning Commission replacements—aims to create a hostile environment for Powell.

The narrative around Powell’s potential resignation is driven by Trump’s frustration with the Fed’s cautious approach to interest rate cuts, which conflicts with his economic agenda of low rates to offset tariff-driven potential stagflation or an economic slowdown. But in reality, Trump is now desperate to need lower interest rates and lower bond yields as his administration now needs to roll over almost $9T worth of US public debt (TSYs).

Thus, Trump wants the Fed to cut rates from July itself by 100 bps with a follow-up in September and December for a cumulative 300 bps rate cuts in H2CY25 against the Fed’s present plan of 50 bps. Trump and his loyalists are also saying that the Fed could have cut rates by now on a low inflation trajectory and may again hike later in 2026-27, if inflation surged on tariffs or any other issues. Trump just wants to refinance the US public debt at a lower interest and then it may not bother about the Fed’s policy. But no central bank operates in this way to cut rates for lower borrowing costs of the government and then hikes again.

Market impact

On Friday, Wall Street stumbled on Trump’s tariff salvo after he imposed 35% tariffs on Canadian imports and promised higher tariffs for other nations, ripping off the US for decades after decades. Trump also demanded payback from those countries and said they must now pay the scheduled tariffs to the US from August 1, if they want to access the US market (superstore), the largest consumer market in the world.

Trump said he is also considering imposing 15% to 20% tariffs on most and even 50-70% on selected US trading partners. The current worldwide baseline minimum tariff rate for almost all US trading partners is 10%, with added reciprocal tariffs ranging from 10-50%. The market may now be figuring out the actual effective and weighted average rate of Trump’s tariffs and their potential impact on the US as well as the global economy. 

The US is now collecting a record amount of tariffs from US importers, reaching $26.63 billion in June’25, totaling $108.02 for the 9MFY25 (Oct’24-Sep’25) vs $55.61 in the comparable preceding period. the TSY estimate for FY25 tariffs collections is now around $300B. All these tariffs may be equally distributed by three stakeholders like US importers, consumers and maybe also global exporters, to retain market share. Thus, both Wall Street, Main Street, and Global Street may be affected by Trump tariffs.

Wall Street also came under pressure after known Fed dove Goolsbee warned that Trump’s latest (August 1) tariffs narrative is complicating the Fed’s task for rate cuts from even September’25. This, coupled with the market chatter about an imminent resignation of Fed Chair Powell, Wall Street (equities) slips further along with USD and UST, while Gold surged.

On Friday, the S&P 500 slipped 0.3% after hitting a record high the previous day. The DJ-30 (Dow Jones) slid -0.6%, while tech-savvy NQ-100 edged down -0.2%. Most sectors were in the red, with health and financials leading the losses, while energy and consumer discretionary were higher. Mega-caps were mixed, with Apple, Meta, and Broadcom in red, while Microsoft, Tesla, Nvidia, Alphabet, and Amazon were higher. For the week, the S&P 500 and the Dow slipped 1.1%, while the Nasdaq 100 added 0.1%. Oil surged on potential US actions on Russian oil cargo movements.

Potential Market Impact of any sudden resignation by Fed Chair Powell

Powell has emphasized the Fed’s legal independence, backed by Supreme Court precedent, making forced removal “for cause” difficult. Powell’s potential resignation due to political pressure would undermine the Fed’s credibility and disrupt financial markets. But hopes of a dovish Fed Chair and Trump's ‘yes man’ may boost equities, while USD may slip and Gold may surge on hopes of Fed rate cuts from July. At the same time, Trump’s bellicose tariff imposed on the EU @30% vs expectations of 10% may also drag EUR, boost USD, and drag Gold to some extent. But overall, Gold will be boosted on the credibility issue of USD and UST.. A sudden resignation could trigger a market sell-off for risk assets on the Fed independence issue; USD, UST and even equities may plunge, at least initially, while Gold will surge.

Technical outlook: DJ-30, NQ-100, SPX-500 and Gold

Looking ahead, whatever may be the narrative, technically Dow Future (CMP: 44800) now has to sustain over 45000 for a further rally towards 45300*/45800* and only sustaining above 45800, may further rally to 46100/46500-47100/47200 in the coming days; otherwise sustaining below 44950, DJ-30 may again fall to 44200/43900-43400/42400 and 41700/41200-40700/39900 in the coming days.

Similarly, NQ-100 Future (23000) now has to sustain over 23100 for a further rally to 23300*/23600-23800/24000 and 24100/24450-24700/25000 in the coming days; otherwise, sustaining below 22900, NQ-100 may again fall to 2400/22200-21900/20900-20700/20200 and 19890/18300-17400/16400in the coming days.

Looking ahead, whatever may be the fundamental narrative, technically SPX-500 (CMP: 6300) now has to sustain over 6450 for a further rally to 6525/7000-7500/8300 in the coming days; otherwise, sustaining below 6375/6300-6250/6200, SPX-500may again fall to 6000/5800-5600/5300 in the coming days.

Technically Gold (CMP: 3350) has to sustain over 3375-3395 for a further rally to 3405/3425*-3450/3505*, and even 3525/3555 in the coming days; otherwise sustaining below 3365-3360, Gold may again fall to 3340/3320-3300*/3280 and 3255*/3225*-3200/3165* and further to 3130/3115*-3075/3015-2990/2975-2960*/2900* and 2800/2750 in the coming days.

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