Jay Hatfield doesn’t mince words. “Chair Powell has been a disaster,” the CEO of Infrastructure Capital Advisors said in a recent interview. “He doesn’t understand how to deal with tariffs. Most of the Fed doesn’t. And it needs to be reformed.”

But here’s the kicker: while Hatfield believes the Federal Reserve desperately needs a new direction — and even a new chair — he says President Trump firing Jay Powell right now would be catastrophic for the markets.

“If this happened, we’d lose 200 to 300 S&P points and 30 to 40 basis points on the ten-year,” Hatfield warned. “Some of that’s already being priced in — and it hasn’t even happened yet”​

Watch: InfraCap CEO Jay Hatfield's warning about the Fed.

Short-Term Shock, Long-Term Buy?

Investors are walking a tightrope. Hatfield sees a short-term market drop of up to 6% if Powell is removed in the coming weeks. “That’s a huge buying opportunity,” he argued. “Because it’s bullish — the Fed’s more likely to cut rates.”

Still, timing is everything. Hatfield urged the Trump camp to hold off until at least Q3 — after tax legislation clears and trade clarity emerges. “It’s clearly a horrible time to do this,” he said​.

Behind the immediate panic lies an even more consequential shift. Hatfield believes the Fed’s entire policy framework is flawed — anchored to a “deeply delayed” inflation metric and an “arbitrary” 2% target. “It’s more important to reform the Fed’s policy than it is to just have a new Fed chair,” he emphasized​.

Trump’s Target: “Too Late” Powell

President Donald Trump, meanwhile, is turning up the heat. In a pair of fiery Truth Social posts, the former president bashed Powell for refusing to cut rates despite falling energy and food prices.

“With these costs trending so nicely downward... there can almost be no inflation,” Trump posted Sunday. “But there can be a SLOWING of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW.”

Last week, he went further: “Powell’s termination cannot come fast enough!” Trump wrote, blaming the Fed chief for a “typical, complete ‘mess.’”

While Trump’s team is pursuing a Supreme Court case to expand his removal powers over independent agencies, the law around firing the Fed chair remains murky. The 1913 Federal Reserve Act allows for dismissal “for cause,” not policy disagreements — a key constitutional distinction reinforced in the Supreme Court’s Humphrey’s Executor ruling in 1935.

That’s unlikely to slow Trump down. “If I want him out, he’ll be out of there real fast, believe me,” he reportedly told advisers, according to Nobel laureate economist Paul Krugman​.

Krugman: A “Trumpified Fed” Could Break the System

In a blistering Substack piece , Krugman warned that turning the Fed into a political tool would be a historic mistake. “We really, really don’t want someone that crazy dictating monetary policy,” he wrote, citing Trump’s erratic demands for preemptive rate cuts while imposing massive tariffs that fuel inflation​.

Krugman compared Trump’s vision to Recep Tayyip Erdoğan’s economic mismanagement in Turkey. “Trump has embraced crank economic doctrines... [claiming] tariffs won’t raise consumer prices,” he said. “Does anyone doubt that when inflation rises, he’ll dismiss it as ‘fake news’?”​

Bottom Line for Investors

Brace for turbulence. Whether Powell stays or goes, the Fed is now in the political crosshairs — and markets are on notice. A premature firing could trigger a sell-off, spike bond yields, and further weaken the dollar.

But as Hatfield sees it, that panic could be the dip to buy because he believes the Fed will be forced to cut rates. “It’s like an injection of $400 billion into capital markets,” he said, if rate cuts follow. “Short-sighted move? Maybe. But very bullish in the end”​.