What Would a New Treasury-Fed Accord Look Like?
The institutions are longtime frenemies, and Trump could complicate their relationship even further.
Illustration: Raven Jiang for Bloomberg
Donald Trump is hoping that he’ll be the first president to pick a fight with the Federal Reserve and win. The White House wants the central bank to bolster MAGA-nomics by bringing down borrowing costs, and Treasury Secretary Scott Bessent has urged Chair Jerome Powell to be more “imaginative,” even calling for a “revamp” of the Fed itself. One key candidate to replace Powell, former Fed official Kevin Warsh, has gone further, arguing for a new Treasury-Fed accord to replace the 1951 deal that shaped central bank independence.
Trump now has the biggest opening in decades to exert influence over the Fed, and he’s approaching it like a revolutionary. It’s at least possible that he will be able to secure a majority on the Fed’s seven-member board of governors, including nominating the next chair. He wants to fire Lisa Cook, a Biden appointee, but so far a lower court has blocked that effort, meaning she’ll probably vote at next week’s rate-setting meeting. But she’ll likely be joined by Stephen Miran, who is set to be on leave as chair of the White House’s Council of Economic Advisers to fill a short-term seat — an appointment that marks the closest ties between the White House and the Fed in nearly 90 years.