Policymakers urge Trump to refrain from intervening in Federal Reserve decisions.
Trump’s past criticism of Fed chair Powell raised concerns about the Fed’s autonomy.
Advisors warn that Fed interference could risk economic stability and investor confidence.
Current and former policymakers have issued a clear message to President-elect Donald Trump: do not interfere with the autonomy of the U.S. Federal Reserve.
The caution follows recent remarks from Trump indicating his desire for influence over the Fed’s monetary policy, particularly regarding interest rate cuts.
During an interview with Bloomberg last week, Trump disparaged the Fed chair’s decision-making, suggesting that rate determinations might as well be random.
However, current Fed Chair Jerome Powell, appointed by Trump, has previously responded with warnings about maintaining the Fed’s independence.
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Powell stressed that the central bank's decisions should remain free from political influence to ensure long-term economic benefits for the United States.
Despite this, Trump has openly criticized Powell since 2017, expressing dissatisfaction with the Fed’s reluctance to implement the lower interest rates he favored.
At one point, he went so far as to label Powell as an “enemy” for resisting these demands, causing concerns among policymakers and economists about the potential for political influence on Federal Reserve policies.
Powell, in response, stated that he would not step down if pressured, citing his term's legal protections.
This ongoing tension has drawn further attention due to Trump’s economic policies, including proposed tariffs, large-scale deportations, and tax cuts, which could increase inflationary pressures and demand a more measured approach from the Fed.
However, with Trump’s direct influence on the Fed limited to appointment powers, experts say firing or demoting Powell is unlikely without significant legal hurdles.
Powell has emphasized that the Fed operates on an apolitical basis and has strong bipartisan support for its independence. Trump's advisors have similarly advised caution, warning that any attempt to appoint a compliant Fed chair could threaten investor confidence and heighten stagflation risks.
Trump’s apparent frustration mirrors former President Nixon's, who also believed the Fed should consider presidential perspectives.
