Former President Donald Trump, a self-described enemy of the Federal Reserve, has had an up-and-down relationship with Jerome Powell. This strain started when Powell assumed the chair of the Federal Reserve in 2018. The former president’s criticisms have escalated over time, particularly regarding interest rate policies that he believes do not align with his administration’s economic goals. As Powell’s term approaches its conclusion next year, the ongoing tension raises questions about the independence of the Federal Reserve in the face of political pressure.
Yet Trump appointed Powell to run the Federal Reserve, trusting that political luck would allow him to enjoy Powell’s smarts on monetary policy. Soon after his appointment, Powell became the target of Trump’s wrath. The former president ended up going on social media to attack Powell, calling him a “bonehead.” This tirade revealed his deep irritation with the Fed’s interest rate hikes and their broader economic stewardship.
Whatever Trump now claims—and especially his insistence that he never meant to fire Powell—his public statements tell a different story. Just the other day, Trump tweeted that Powell’s “firing would be a welcome relief!” His subsequent denials to reporters of any intention to remove Powell were a direct contradiction to that admission. What emerged, however, was a complicated codependency between the two.
Powell’s tenure has been defined by crises, most prominently over the inflation crisis. At first he labeled increasing prices as “transitory,” a move that earned him criticism from both Democrats and Republicans. For one, critics say it’s this backward-looking approach that’s made the Fed slow to act against the inflationary pressures at present.
Indeed, Trump’s distaste for Powell’s performance was clear from the outset of the chair’s appointment. After all, the former president has had a long-standing preference for low interest rates as a tool to juice economic growth. Indeed, his critiques of Powell’s policies reveal a deep appetite to expand presidential control over monetary policy. This is a remarkable departure from the deference presidents have shown to the Fed in recent decades.
Specifically, in response to Trump’s repeated, relentless attacks, Powell has rightly dug in on his most important tenure goal—increasing perceptions of Fed independence. He stressed that he is immune to political pressures. For one, he strongly disputes the idea that the president has legal authority to fire him from the job. This insistence on autonomy aligns with the Federal Reserve’s foundational principle of operational independence, a concept that has been underscored by experts like Sarah Binder, who noted that “perceptions of independence really matter.”
The continued spat between Trump and Powell – whom the president has repeatedly attacked on Twitter – underscores a deep and very intentional departure from accepted Washington norms. In an era when presidents largely understood that the Federal Reserve’s primary long-term directive is economic stability, they avoided publicly calling out the Fed. Trump’s approach diverges sharply from this tradition, raising concerns among economists and policymakers about the long-term implications for the Fed’s credibility.
Further supportive comments from economist Joe Lavorgna on Trump’s criticisms Trump has long attacked the Fed for being slow in responding to early signs of economic change. He stated, “I’m completely on board with the president’s sympathies or comments that the Fed has historically been late.” In particular, critics are exasperated with the state of monetary policy. Critics say it has failed to establish signals effective enough for today’s economic realities.
As Powell’s term winds down, the guesswork over his future heats up. All of those questions aside, many have been asking if there will be political leadership change at the Federal Reserve. The political landscape around this conversation is confusing. Now a private citizen, Trump continues to exert influence over the institution he once presided over.
“Things that are given can be taken away.” – Mark Spindel
This persistent tension leads to some constructive questions about the future of monetary policy under a possible new administration. Experts warn not to interpret these changes purely through a political perspective. Donald Kohn remarked on the importance of stability within the markets and cautioned against jumping to conclusions about future economic outcomes.
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