Trump Renews Criticism of Fed Chair Powell, Igniting Debate Over Central Bank Independence

Former President Donald Trump launched fresh attacks on Federal Reserve Chair Jerome Powell this week, accusing him of pursuing “disastrous” monetary policies and politicizing the central bank. The remarks—delivered during a campaign rally in Iowa and amplified on social media—revive a years-long feud between Trump and the Fed chief he appointed in 2018, while stoking concerns about political interference in the institution’s independence.

Trump’s Latest Broadside

In a fiery speech to supporters, Trump claimed Powell was “intentionally keeping rates low to help Democrats” ahead of the 2024 election, despite the Fed’s benchmark rate sitting at a 22-year high of 5.25–5.5%. “He’s trying to make the economy look good for Biden, but everyone knows it’s a mess,” Trump said, referencing persistent inflation and rising borrowing costs.

The critique echoes Trump’s frequent clashes with Powell during his presidency, when he lambasted the Fed for raising rates in 2018 and implored it to cut rates to near zero during the COVID-19 pandemic. Analysts note the irony of Trump’s renewed criticism, given that inflation has cooled from 9% in 2022 to 3.7% this year, while unemployment remains at a historic low of 3.8%.

A Fraught History

Trump’s relationship with Powell has long been contentious. After appointing him in 2018, Trump publicly berated Powell for raising interest rates, calling the Fed the “biggest threat” to his economic agenda. In 2020, Trump even explored legal avenues to remove Powell, according to former aides.

Powell, a Republican initially seen as a moderate, has consistently defended the Fed’s apolitical mandate. “We do not consider politics in our decisions,” he reiterated at a September press conference. “Our focus is on achieving maximum employment and stable prices.”

Experts Push Back

Economists and former Fed officials have dismissed Trump’s claims as baseless. “The Fed’s rate hikes since 2022 have been the most aggressive in decades—hardly a partisan move,” said Claudia Sahm, a former Fed economist. “Accusing Powell of aiding Biden is divorced from reality.”

Others warn that Trump’s rhetoric undermines public trust. “Attacking the Fed’s independence for campaign points is reckless,” said Peter Conti-Brown, a central bank historian at the University of Pennsylvania. “It risks destabilizing markets and weakening the institution’s ability to combat future crises.”

Political Implications

Trump’s broadsides come as President Biden faces voter frustration over inflation. While the White House has avoided direct criticism of the Fed, Biden recently acknowledged that “high prices are still squeezing families.”

Republican candidates, meanwhile, are walking a tightrope. Some, like Florida Governor Ron DeSantis, have echoed Trump’s calls to audit the Fed, while others, including former Vice President Mike Pence, caution against eroding its independence.

What’s Next?

With the 2024 election looming, the Fed’s next moves could shape the economic landscape:

• Rate Cuts in 2024?Markets now expect the Fed to hold rates steady through early 2024, with potential cuts later in the year if inflation cools further.
• Legislative Threats:House Republicans recently advanced a bill to subject the Fed to more congressional oversight, though it faces a Senate veto.
• Powell’s Future:Powell’s term expires in 2026, but a Trump victory in 2024 could prompt an early replacement effort.

Key Quote

“The Fed is the economy’s referee. If you politicize the referee, the whole game collapses.”
— Jason Furman, former Obama economic advisor

Final Word:
Trump’s renewed salvos against Powell underscore the high-stakes battle over economic narratives—and the fragility of central bank independence—in a divided America. As the election heats up, the Fed’s every move will face unprecedented scrutiny from all sides.