Fed chair Powell in Trump's firing line

What happened

President Donald Trump said Wednesday it was "highly unlikely" he would remove Federal Reserve Chairman Jerome Powell from his post. But he suggested Powell might have "to leave for fraud" over the $2.5 billion Fed headquarters renovation project that the president says has been mismanaged.

Trump has ramped up pressure on Powell to cut interest rates as his own import tariffs nudge inflation upward. Stocks dropped on the prospect of a firing, then rebounded.

Who said what

Trump confirmed he had "talked about the concept" of removing Powell with House lawmakers this week. He said he was "surprised" Powell was appointed, seemingly forgetting he nominated Powell himself in 2017.

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Firing Powell "would likely roil financial markets and lead to a consequential legal showdown," Bloomberg said. "Playing around with the Fed can often have adverse consequences," JPMorgan Chase CEO Jamie Dimon said. "It is important they be independent." Indeed, markets need to see the Fed chair as a "serious policy-maker and not an Oval Office pushover," said The Wall Street Journal editorial board.

What next?

Powell's term ends in May next year, and Trump could name his successor as early as this month. Meanwhile, Powell has asked the Fed's inspector general Michael Horowitz to review the central bank's costly renovation project.