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According to the Financial Times (FT), current and former policymakers have cautioned Trump against undermining the U.S. Federal Reserve’s autonomy during his second term. President-elect Trump has previously expressed his wish to have a say in the Fed’s decisions, especially on interest rate cuts. The lawmakers reportedly expressed concerns over Trump’s potential interference with the Fed, saying it could destabilize the U.S. economy and global financial markets. The FT reported that Trump had turned against his appointee Powell in 2017, branding the Fed chair an “enemy” and “clueless” for resisting his demands for lower interest rates.  Trump’s attempt to interfere with the Fed’s policies could be tragic Fed Chair Powell sent a warning shot to President-elect Trump on Thursday, given fears that his planned enactment of sweeping tariffs, mass deportation of immigrants, and lowering taxes could trigger price pressures. The FOMC had just voted to cut interest rates by a quarter-point to the 4.5%-4.75% target.  According to Reuters, the Fed is expected to face a hostile White House despite inflation dropping to a 2.4% annualized rate and unemployment sitting at 4.1%. Essentially, Trump’s avowed policies and meddling tendencies threatened to cut these Fed’s success stories short. The main problem is that Trump had subtly shown his intentions to undermine the Fed’s hard-earned independence. However, Bloomberg reported that Trump’s advisors cautioned him against his intended retaliatory decisions to fire or demote Powell given the associated legal limits. Powell explicitly stated that he would not step down if asked to. Powell’s term as Fed chair will end in 2026, while his 14-year term as a governor will end in 2028. Reuters reported that Trump shared former president Richard Nixon’s sentiments that the Fed should respect his views.  “I don’t think I should be allowed to order it, but I think I have…

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Filed under: News - @ November 10, 2024 5:26 am