The American president cannot tell the Federal Reserve chair what to do – and that is by design.
But Trump could fire Powell if he chose to – unprecedented as that would be.
You only need to look at the market reaction to Trump’s language about Powell for a hint at how his firing would impact the global economy.
“Powell’s termination can’t come fast enough,” Trump said last week.
On Monday, he called Powell a “major loser”. This schoolyard language has global economic implications.
The markets – including the all-important bond markets – reacted with sell-offs at the end of the day.
Image: Donald Trump leaves the Rose Garden after announcing Jay Powell as his nominee to become chairman of the US Federal Reserve in 2017. File pic: Reuters
Powell is a registered Republican. Trump hired him as Fed Reserve Chair during his first term but the relationship became fractious, fast.
Yet Trump did not remove him back then.
The position has a four-year term and President Joe Biden nominated him to a second term in 2022. That gives him until 2026.
Trump sees Powell increasingly as a barrier to his agenda. Trump’s ‘burn hot’ economy ideology does not align with Powell’s more pragmatic centrist ideology.
He is unable to influence and bend Powell in the way that he has done with his own cabinet and members of Congress.
In his first term, Trump was talked out of removing Powell. But we know this second term is wholly different. He was talked away from the edge on many issues during his first term. This time, in many areas, he’s jumped.
Remember, Trump forced out two FBI directors – one in each term – because neither was considered to be loyal enough. The FBI, like the Federal Reserve, is considered traditionally to be independent.
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13:27
Could Trump make a deal with the UK?
Of course, the Federal Reserve has a profound global influence in a way the FBI, as an institution, does not.
The fed chair, with his role in setting interest rates and so much more, is arguably the last powerful, independent pillar of the economic policy structure in the US.
Congress has largely devolved its role to Trump and the executive branch, as illustrated by his tariff plans (which Congress could have influenced but chose not to).
Donald Trump’s removal of Jay Powell and replacement with a compliant loyalist could fundamentally shake the global economy.
Powell is one of the few reliable actors left defending economic stability in the US
Donald Trump’sdisparagement of Jay Powell as a “major loser” is not the first time he has insulted the man he appointed as chair of the US Federal Reserve in 2018.
The president appears to have had buyer’s remorse from the moment he approved the former investment banker to fill a post that is fundamental to US economic stability.
Trump was calling for the Fed to cut rates and stimulate the economy long before he was re-elected, but online barbs have more consequence when fired from the Oval Office than the campaign trail.
Equivalent to the Governor of the Bank of England, the chair of the Federal Reserve ultimately directs US monetary policy, including the setting of short-term interest rates, with the aim of maintaining high employment and stable inflation.
That makes Powell a crucial figure amid the chaos and incoherence of Trump’s economic policy, which in less than 90 days has shattered the certainties that made America the world’s largest economy, and the dollar the global reserve currency.
Image: Jay Powell speaks to the media in March. File pic: Reuters
The market reaction to Trump’s venting against Powell, and briefing that his administration is considering ways to remove him from office, suggests investors fear it will make a bad situation worse.
As traders returned from the Easter weekend with the president’s criticism of Powell ringing in their ears, the “Trump slump” deepened.
US stocks and the dollar fell, while yields on US Treasuries – the mechanism by which the government borrows money – rose, indicative of falling bond prices as investors dumped US debt.
Gold prices, meanwhile, hit a record $3,500 an ounce as investors piled into what remains the pre-eminent “safe haven” asset in times of uncertainty.
The combination of falling equity, currency and bond prices is a toxic trifecta more usually associated with emerging economies in political crisis, not the mighty United States.
We saw something similar here in 2022, when Liz Truss and Kwasi Kwarteng’s unfunded tax cuts, presented without an independent assessment from the Office for Budget Responsibility, caused a run on the gilt market.
Then it was the Bank of England that stepped in to stabilise the bond market.
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1:03
How will tariffs impact you?
What’s happening in the US is both bigger and more consequential.
Trump’s tariff program, seemingly imposed and withdrawn by presidential whim, has already proved disastrous for market sentiment, with expectations of higher inflation and lower growth, at home and globally, set to be confirmed by the International Monetary Fund in Washington this week.
Powell and the Fed are among the few reliable actors in this drama, with markets betting their next meeting in May will see rates held, in part because of inflationary policy made in the White House.
The prospect of Powell being replaced by a more pliant figure hand-picked by Trump would pull another block from the wobbling Jenga tower of US economic credibility.
The independence of the Fed is one of the foundations of American stability, an assumption that underpins the $29 trillion Treasuries market that makes the world’s debt go round.
If investors large and small, state and private, fear that the US is not good for that debt, it could be calamitous for American pre-eminence and the global economy.
Powell’s term ends in 2026 and he believes he cannot be removed by presidential decree.
That does not mean he will not face more pressure to stand aside.
At least 104 people have died in the flash floods that have left a trail of destruction across Texas.
Kerr County Sheriff’s Office said the number of bodies found in the area had risen from 75 to 84 – including 56 adults and 28 children.
The have been seven fatalities in Travis County, six in Kendall County, four in Burnet County, two in Williamson County and one in Tom Green County.
Earlier, White House press secretary Karoline Leavitt warned that “the situation on the ground remains dangerous” and that there “could be additional public safety threats with additional incoming heavy rain”.
Image: A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
The floods that first struck on Friday have wreaked havoc and left people in a state of grief – with 27 of the confirmed deaths having taken place at a girls’ summer camp in Kerr County.
Among those killed at Camp Mystic were Renee Smajstrla and Sarah Marsh, both eight, Eloise Peck and Lila Bonner, both nine,and the camp’s director Richard Eastland.
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A photo has now emerged showing the inside of the camp on Saturday after the waters hit.
At least 41 people are still missing in the state – including 10 girls from Camp Mystic.
Image: Renee Smajstrla, eight, died in the flash floods at Camp Mystic, Texas. Pic: Family handout
Image: Sarah Marsh, eight, died in the flash floods at Camp Mystic, Texas. Pic: Family handout
In her news conference, Ms Leavitt criticised people who have claimed the Trump administration’s cuts to the National Weather Service (NWS) have played a role in the worsening the disaster.
It comes after Texas officials criticised the NWS by claiming it failed to warn the public about the impending danger.
Meanwhile, Senate Democratic Leader Chuck Schumer asked the Department of Commerce’s acting inspector general on Monday to probe whether staffing vacancies at the NWS’s San Antonio office contributed to “delays, gaps, or diminished accuracy” in forecasting the flooding.
The NWS did not immediately respond to a request for comment on Mr Schumer’s letter, but earlier defended its forecasting and emergency management.
Image: Flooding near Kerville, Texas. Pic: US Coast Guard/AP
Ms Leavitt has told reporters that claims Mr Trump was responsible for any issues related to the flash floods response were “depraved and despicable”.
“It is not [a political game], it is a national tragedy,” she said.
The press secretary also claimed, in relation to some NWS offices being reportedly understaffed, that one place actually had “too many people”.
“Any person who has deliberately lied about the facts around the catastrophic event, you should be deeply ashamed,” she said.
Image: Rescuers at Camp Mystic along the Guadalupe River in Texas after a flash flood swept through the area. Pic: AP
Image: Members from Texas Game Wardens of the Law Enforcement Division works following flash flooding, in Kerrville, Texas. Pic: Reuters
She also said that Mr Trump was going to visit Texas “later in the week”.
Previously, Mr Trump said it was likely he would visit on Friday.
Image: Car is wedged in the ground following deadly floods in Texas
Image: Karoline Leavitt in the press briefing room
Texas Senator Ted Cruz spoke at a news conference and said: “Texas is grieving right now, the pain, the shock of what has transpired these last few days has broken the heart of our state.
“Those numbers [the number of dead] are continuing to go up… that’s every parent’s nightmare, every mum and dad.”
Image: A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
Image: Damaged vehicles and debris are seen roped off near the banks of the Guadalupe River after flooding in Ingram, Texas. Pic: AP
He said he had picked up his own daughter from a camp in the area last week.
Mr Cruz added: “You know what I’d do? What I did when this happened? Just go hug your kids.
“Because I’ve got to tell you, I hugged my girls with tears in my eyes.”
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1:04
Texas flooding: Aerial footage of rescues
Dalton Rice, the city manager of Kerrville in Kerr County, was asked whether evacuation warnings could have been issued earlier.
He said: “It’s very tough to make those calls because we also don’t want to cry wolf.
“You know, we want to make sure that we activated [it] at the right time.”
He added: “We had first responders getting swept away, responding to the first areas of rainfall. That’s how quick it happened.
“They were driving to these areas and one of them got swept off the road.”
Videos and satellite imagery show how quickly Donald Trump’s detention centre in Florida has been constructed – as experts suggest the design of the site is flawed and will compromise the safety of people being held there.
Sky News’ Data and Forensics team has verified footage posted on social media that shows water covering the ground near electricity cables during a storm as the first detainees were due to arrive.
The Florida Division of Emergency Management (FDEM), run by Governor Ron DeSantis, posted on X that detainees were at the site on 3 July just before 1pm local time (6pm UK time).
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Donald Trump held a tour of the facility on 1 July that took journalists around “Alligator Alcatraz”. Its name is a reference to both the local reptile population and the former maximum-security Alcatraz Federal Penitentiary in San Francisco Bay, California.
The tour showed the rapid construction of the centre, designed to accommodate up to 3,000 detainees. The purpose of the site is to house individuals detained by US Immigration and Customs Enforcement (ICE).
James Uthmeier, Florida’s attorney general, posted on X: “And in just a week, Alligator Alcatraz was built.”
Political commentator Benny Johnson, who was on the tour, praised the eight-day turnaround. “I don’t think anyone realises how impressive Alligator Alcatraz is,” he said.
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Amid those positive comments, videos emerged highlighting flooding in the centre, with electricity cables covered with water on the day of the tour.
The flooding was said to have been caused by a small storm. However, the state department claims the structures and tents can withstand category two hurricanes, reaching 110mph winds.
FDEM spokesperson Stephanie Hartman wrote in a statement that “vendors had tightened any seams at the base of the structures that allowed water to come in during the storm”. She described the water intrusion as minimal.
Steff Gaulter, a Sky News meteorologist, said: “In the last 10 years, we’ve seen 13 hurricanes that have hit Florida. Seven of them have been category three or higher.
“As well as needing to know how strong these storms are as they come, it’s also very unpredictable, their track can change at the last minute.”
The American Society of Civil Engineers (ASCE) and the Structural Engineering Institute (SEI) have said structures in risk category two – which Alligator Alcatraz falls under – need to withstand 121mph wind gusts.
If the housing tents exceed 300 occupants per tent, the guidelines go up to 167mph.
Ms Gaulter explained: “You don’t necessarily need a hurricane in order to see a gust of wind over 100mph. In the lowest category of hurricane, category one, the range of winds would be between 74mph and 95mph. But even in that category, you can easily get a gust of wind up to 120mph.”
Dr Patrick McSharry, Professor at Carnegie Mellon University and former head of catastrophe risk financing at Oxford University, told Sky News that in a hurricane “there’s no way that a tent is going to be in any way something that you would advise someone to be in”.
“It’s more the case of having a plan in place that can be mobilised really fast to get people out of that dangerous situation.”
The site is also located in a hurricane-prone region as defined by ASCE.
Discussing building regulations, Dr McSharry said: “We’re dealing here potentially with human lives so it’s an even more sensitive calculation I think that needs to be made.”
Image: The blue pin marks Alligator Alcatraz. The key shows average wind speeds. Credit: ASCE.
Sky News put these concerns to Ron DeSantis and the Florida state department, but did not receive responses.
White House spokeswoman Abigail Jackson told Sky News: “Alligator Alcatraz is a state-of-the-art facility that will play a critical role in fulfilling the president’s promise to get the worst criminal illegal aliens out of America as fast as possible.
“President Trump is grateful to partner with [Homeland] Secretary [Kristi] Noem and Ron DeSantis on this important project.”
Satellite imagery obtained by Sky News shows the rapid construction of the centre, which was formerly Dade-Collier Training Airport.
Five days after the centre was announced by Florida’s attorney general James Uthmeier, more than 60 new trailers can be seen on the right-hand side of the runway.
Satellite imagery obtained by Sky News also shows that from 24 June to the opening date on 1 July, more than seven large housing tents were put up at the site.
Image: Satellite imagery showing the site on 24 June. Credit: Maxar
Image: An aerial photo of the site on 1 July. Credit: AP
The site is reportedly set to open with 3,000 beds, expanding to 5,000 by early July.
It is also reported that the site will cost an estimated $450m (£330m) per year to operate, with a bed costing $245 (£180) per day.
The bill is reported to be covered by the state of Florida, which plans to get money back from the Federal Emergency Management Agency (FEMA) and Department of Homeland Security (DHS).
Tessa Petit, director of the Florida Immigrant Coalition, told Sky News: “It was constructed too [quickly]. This is a sign that we’re seeing a disaster [waiting to] happen as we look at it.
“Usual detention centres come up with, you know, their bricks and mortar, right? This is not bricks and mortar. This is just tents and mobile homes that are assembled on an airstrip.”
“There’s a detention of immigrants in a place that has been in the past ravaged by hurricanes and we’re getting into hurricane season,” Ms Petit added.
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She is concerned that medical support and sanitary provisions, like a sewage system, will not have been properly installed.
“You can’t build a sewage system that can sustain 3,000 people in eight days. You can’t dig in the Everglades. So, what are going be the additional sanitary conditions?” she said.
There are also sustainability concerns about the site.
The Centre for Biological Diversity has filed a lawsuit in US District Court to protect the Florida Everglades. They state it is “a reckless plan to build a massive detention centre for people caught in immigration raids”.
Tania Galloni, an attorney working with the Centre for Biological Diversity, stated the proposed plan “has not undergone the environmental review required by federal law, and the public has had no chance to provide feedback”.
The Data and Forensics team is a multi-skilled unit dedicated to providing transparent journalism from Sky News. We gather, analyse and visualise data to tell data-driven stories. We combine traditional reporting skills with advanced analysis of satellite images, social media and other open source information. Through multimedia storytelling we aim to better explain the world while also showing how our journalism is done.
Israel’s prime minister has nominated Donald Trump for the Nobel Peace Prize.
Benjamin Netanyahu made the announcement at a White House dinner, and the US president appeared pleased by the gesture.
“He’s forging peace as we speak, and one country and one region after the other,” Mr Netanyahu said as he presented the US leader with a nominating letter.
Mr Trump took credit for brokering a ceasefire in Iran and Israel’s “12-day war” last month, announcing it on Truth Social, and the truce appears to be holding.
The president also claimed US strikes had obliterated Iran’s purported nuclear weapons programme and that it now wants to restart talks.
“We have scheduled Iran talks, and they want to,” Mr Trump told reporters. “They want to talk.”
Iran hasn’t confirmed the move, but its president told American broadcaster Tucker Carlson his country would be willing to resume cooperation with the UN nuclear watchdog.
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But Masoud Pezeshkian said full access to nuclear sites wasn’t yet possible as US strikes had damaged them “severely”.
Away from Iran, fighting continues in Gaza and Ukraine.
Mr Trump famously boasted before his second stint in the White House that he could end the Ukraine war in 24 hours.
Critics also claiming President Putin is ‘playing’ his US counterpart and has no intention of stopping the fighting.
However, President Trump could try to take credit for progress in Gaza if – as he’s suggested – an agreement on a 60-day ceasefire is able to get across the line this week.
Indirect negotiations with Hamas are taking place that could lead to the release of some of the remaining 50 Israeli hostages and see a surge in aid to Gaza.
America’s Middle East envoy, Steve Witkoff, is to travel to Qatar this week to try to seal the agreement.
Whether it could open a path to a complete end to the war remains uncertain, with the two sides criteria for peace still far apart.
President Netanyahu has said Hamas must surrender, disarm and leave Gaza – something it refuses to do.
Mr Netanyahu also told reporters on Monday that the US and Israel were working with other countries who would give Palestinians “a better future” – and indicated those in Gaza could move elsewhere.
“If people want to stay, they can stay, but if they want to leave, they should be able to leave,” he added.