Who Will Protect the Fed’s Independence? The Markets
If the president gets into a dispute with the central bank, Congress and the courts are more likely than they were last time around to give him support.
In friendlier days.
Photographer: Olivier Douliery/Bloomberg
If you thought President Donald Trump roughed up the Federal Reserve in Season 1, just wait for Season 2. During his first term, Trump repeatedly bullied the Fed, demanding lower interest rates despite a strong economy and stable prices. Now he is again demanding lower interest rates , just as the Fed appears to be hitting pause on rate cuts, and even before he took office he engineered the demotion of Michael Barr, the Fed’s top banking cop, and questioned the judgment of Fed Chair Jerome Powell.
Trump’s interventions will supercharge political pressure on the Fed at the same time that it is nursing the country’s inflation hangover. And this time around, the central bank has fewer defenders and guardrails to protect it.