Jerome Powell, the chair of the Federal Reserve, faces heightened scrutiny and criticism from former President Donald Trump and several key allies. Peter Navarro, the senior counselor for trade and manufacturing, provided a pointed rebuke of Powell. He referred to him as one of the worst Fed chairs in U.S. history. This powerful rebuke coincides with the time that Trump has been ramping up his demands on the Federal Reserve to slash interest rates.
Bill Pulte, the new head of the Federal Housing Finance Agency, has urged Congress to look into Powell’s conduct. This arrives amid rising alarm over the Federal Reserve’s handling of monetary policy. Trump’s frustration with Powell shines through in a recently uncovered handwritten letter Trump sent to Powell, begging him to lower interest rates. The former president has gotten pretty explicit about this. Just earlier this month, he went as far as to call for Powell’s resignation from the Fed altogether.
Russell Vought, who served as Trump’s director of the Office of Management and Budget (OMB), accused Powell of violating government oversight regulations and lying to Congress. In a pointed critique, Vought remarked, “The President is extremely troubled by your management of the Federal Reserve System.” He further criticized Powell’s focus on renovating the Fed’s headquarters instead of addressing fiscal issues, stating, “Instead of attempting to right the Fed’s fiscal ship, you have plowed ahead with an ostentatious overhaul of your Washington D.C. headquarters.”
In light of this deluge of vitriol directed at Powell from Trump and his surrogates, Powell has masterfully decided to say nothing in response to the malignant allegations. Under his leadership, the Federal Reserve is doing its utmost to tame inflation. Simultaneously, they are continuing to try to focus on fostering a robust labor market. Trump’s ongoing pressure raises questions about Powell’s independence and stability within the organization.
Analysts have cautioned that if the market believes Powell might lose his independence in any capacity, the financial markets would react very negatively. Ed Mills, a policy analyst, stated, “I do think this could have the opposite impact of what they think it could.” He cautioned that undermining the independence of the leadership at the Federal Reserve would result in market turmoil.
Trump’s public beratement of Powell includes derogatory nicknames such as “Too Late,” reflecting his frustration over what he perceives as Powell’s delay in addressing inflation. The former president has criticized Powell for failing to admit the 2022 inflation emergency soon enough. He has been the most vociferous in pushing for rate cuts with inflation appearing to calm.
Though the face-off between Trump and Powell continues, it is already clear that the conflict has profound implications for the future of the Federal Reserve’s leadership. Unlike previous Fed chairmen, analysts predict that Trump will try to have Powell forced out of office. As the Supreme Court has repeatedly held, the president would legally be on shaky grounds to try to justify such a dismissal.