Jerome Powell Signals Surprise Rate Shift—Here’s How It Could Hit Stocks, Mortgages, and Your Wallet

WASHINGTON — White House scrutiny of Federal Reserve Chair Jerome Powell intensified over the weekend after senior economic adviser Kevin Hassett said the administration is “actively exploring” whether President Donald Trump can dismiss Powell “for cause” amid a ballooning $2.5 billion renovation of the Fed’s historic headquarters. The comments mark the most direct threat yet to Powell’s tenure and come as the Fed weighs a possible interest-rate cut as early as its July 29-30 policy meeting. Powell told reporters earlier this month that “no meeting is off the table,” declining to rule out a near-term rate reduction even while signalling a data-dependent approach. Political pressure piles on • Trump has accused Powell of “slow-walking” rate cuts that the president says are needed to shield households from tariff-driven price spikes. • Vice President JD Vance echoed the criticism on X, saying the central bank is “too late” to both fight inflation and lower borrowing costs. • Hassett alleges the Fed “has a lot to answer for” after renovation costs climbed roughly $700 million in two years, a figure critics compare to Versailles-style extravagance. Legal gray zone over firing authority The Federal Reserve Act allows a president to remove a Fed governor “for cause,” but no sitting chair has ever been fired. House Financial Services Chair French Hill (R-Ark.) argues that Trump “does not have the authority,” underscoring bipartisan concern about preserving Fed independence. Markets fear that an unprecedented termination could rattle the dollar and Treasuries, especially with monetary policy already at an inflection point. Rate-cut calculus Core inflation has slid to 2.4 % year-over-year, down from 3.8 % in January, while the unemployment rate has crept up to 4.2 %. Futures show traders placing roughly 25 % odds on a July cut, up from 10 % before Powell’s July 1 remarks. Economists at Goldman Sachs say the Fed “will need one more soft CPI print” before easing, but add that “political risk is becoming a wildcard.” What it means for consumers and investors • Mortgage rates: A quarter-point Fed cut could shave 30-year mortgage rates back below 6 %, sparking a late-summer refinance wave. • Credit cards and HELOCs: Variable-rate borrowers would see relief within one billing cycle. • Stocks: Historically, the S&P 500 gains an average 3.5 % in the month after the first cut of a cycle, though political uncertainty could dampen the rally. Powell’s next moves The chair will testify before the House on July 17 and the Senate on July 18 in the Fed’s semi-annual Monetary Policy Report. Lawmakers are expected to grill him on both the renovation overruns and the timing of rate cuts. According to Fed insiders, Powell plans to reiterate that policy decisions are “based on the data, not the date,” while defending the building upgrade as essential to remove asbestos and lead pipes installed in the 1930s. Why the story matters Jerome Powell’s ability to steer interest-rate policy without political interference is central to the Fed’s credibility. With inflation cooling but global growth wobbling, the stakes for households, Wall Street and the 2026 presidential race could hardly be higher. Search demand for “Jerome Powell,” “can the president fire the Fed chair,” and “July Fed meeting” has surged in recent days, reflecting broad public interest in what happens next.