Former U.S. President Donald Trump has reignited his public feud with Federal Reserve Chair Jerome Powell, calling the central bank leader “incompetent” and vowing to replace him within months. The remarks, delivered during a business dinner in Tokyo, mark the latest escalation in a years-long battle between Trump and the Federal Reserve — one that stretches back to his first term and reveals the political stakes surrounding U.S. monetary policy.

While Powell’s term as chair is set to end in May, Trump’s renewed attacks suggest a broader objective: to reshape the Federal Reserve’s leadership in ways that align with his economic agenda as he positions himself for another potential term in the White House. His criticism also reflects a consistent belief that the Fed’s independence has hampered growth during his presidencies — an argument that has repeatedly put him at odds with financial orthodoxy, Wall Street, and the global central banking establishment.

A Feud Rooted in Economic Philosophy

The friction between Trump and Powell is not new. It began shortly after Powell, originally appointed by Trump in 2018, began raising interest rates to curb inflationary pressure amid a booming U.S. economy. Trump, who built his political brand on promises of economic expansion and market gains, saw those rate hikes as a direct threat to his success narrative.

Throughout his presidency, Trump used public platforms to berate Powell, calling him “clueless,” “a golfer who can’t putt,” and “the enemy of growth.” It was the most combative relationship between a president and a Fed chair since the Nixon era. Trump’s approach broke with decades of tradition in which presidents avoided direct interference with the central bank, maintaining its perceived independence from political influence.

The dispute deepened during late 2018 and early 2019, when the Fed raised rates four times despite Trump’s insistence that looser monetary policy was needed to fuel growth and sustain record stock market highs. As global trade tensions and tariffs introduced volatility, Trump blamed the Fed for slowing economic momentum. He even explored whether he had the legal authority to remove Powell — a move economists warned would trigger a crisis of confidence in U.S. financial governance.

The COVID-19 pandemic briefly tempered their conflict as the Fed slashed rates to near zero and launched emergency lending programs. But tensions resurfaced after Powell began raising rates again to fight post-pandemic inflation during Trump’s second presidency, once more highlighting the ideological divide between political populism and central bank conservatism.

Trump’s Political Motive and the Push for Control

Trump’s renewed criticism of Powell appears driven by both political and strategic goals. With another presidential election approaching, he is eager to project himself as the defender of economic growth against what he portrays as an out-of-touch financial elite. By casting Powell as “incompetent,” Trump aims to frame monetary tightening — and any slowdown in hiring or investment — as the fault of unelected technocrats rather than his administration’s policy decisions.

Behind the rhetoric, Trump’s advisers have begun preparing a shortlist of candidates to replace Powell should the opportunity arise. The list reportedly includes White House economic adviser Kevin Hassett, former Fed Governor Kevin Warsh, current Governor Christopher Waller, Vice Chair for Supervision Michelle Bowman, and BlackRock executive Rick Rieder. Each of these figures is viewed as more sympathetic to the supply-side economics and lower-rate philosophy that Trump favors.

According to Treasury Secretary Scott Bessent, Trump’s top economic lieutenant, the administration intends to finalize its choice by December. Insiders describe the ideal candidate as “growth-minded,” meaning one likely to prioritize job creation and market expansion over inflation targeting — a stance that would mark a dramatic shift in the Fed’s current policy direction. For Trump, a compliant Fed chair would help secure a faster recovery and bolster his claim to having restored America’s economic leadership.

The Broader Implications for Monetary Policy

Trump’s escalating rhetoric comes at a sensitive time for the Federal Reserve, which is balancing the need to contain inflation without derailing the labor market. Analysts expect the Fed to reduce interest rates again soon, marking its second cut this year, as data shows a cooling in consumer spending and slower hiring. Yet Trump’s attacks could complicate the Fed’s communications strategy, which relies on maintaining credibility and independence to guide market expectations.

If Trump follows through on his threat to replace Powell, the move could reshape how investors view the U.S. economy. Markets traditionally treat the Fed’s autonomy as a safeguard against political manipulation of monetary policy. Any perception that the central bank might become an extension of the executive branch could drive volatility in bond yields, currency markets, and equities.

However, Trump’s political base sees things differently. His supporters argue that the Fed’s cautious approach has stifled growth and unnecessarily burdened consumers with high borrowing costs. They view his push for looser policy as a necessary correction to years of what they consider excessive restraint. This populist critique of the Fed resonates beyond partisan lines, tapping into public frustration with rising mortgage rates, shrinking affordability, and uneven post-pandemic recovery.

Trump’s long-term goal appears to be transforming the Federal Reserve into a more politically responsive institution — one that prioritizes employment and growth over inflation control, even if it means tolerating higher price levels in the short term. Such a shift would reverse the inflation-fighting orthodoxy established since Paul Volcker’s tenure in the 1980s and fundamentally alter how monetary stability is managed.

A History of Presidential Pressure on the Fed

While Trump’s confrontation with Powell has drawn global attention, it is not without precedent. U.S. presidents have occasionally clashed with central bankers when economic objectives diverged. Richard Nixon famously pressured then-Fed Chair Arthur Burns to keep interest rates low ahead of the 1972 election, a move that contributed to runaway inflation later in the decade. More recently, Ronald Reagan’s administration sparred with Volcker over tight credit policies, though without the same level of public hostility.

What makes the Trump-Powell feud unique is its visibility. Trump’s frequent public statements, often delivered via social media or campaign rallies, have transformed a traditionally technocratic institution into a political battleground. His remarks from Tokyo — describing Powell as “a bad Fed guy” — reinforced a narrative that the central bank’s cautious stance is an obstacle to national prosperity.

For Powell, maintaining credibility has required balancing restraint with resilience. Despite political attacks, he has avoided direct confrontation and continued emphasizing the Fed’s independence. His tenure has weathered trade wars, pandemics, inflation shocks, and partisan pressure — a rare combination of challenges for any Fed chair. Still, Trump’s attacks have left a lasting mark, injecting partisanship into an institution once considered apolitical.

What Trump Ultimately Seeks

Trump’s strategy in targeting Powell serves both political and economic purposes. By linking the Fed’s decisions to broader voter concerns — jobs, inflation, and mortgage costs — he transforms a complex policy debate into a populist talking point. In doing so, he positions himself as the champion of ordinary Americans against what he frames as an elitist bureaucracy.

Yet beneath the political theater lies a calculated objective: regaining control over monetary levers that influence market behavior and electoral fortunes. A Fed aligned with Trump’s vision could sustain aggressive fiscal expansion, finance infrastructure and defense spending at lower interest rates, and preserve the perception of a thriving economy heading into future elections.

In this sense, Trump’s campaign against Powell is not merely personal. It reflects a broader challenge to the postwar economic model that insulated monetary policy from politics. As he eyes potential successors and signals another shift in economic doctrine, Trump is once again testing the boundaries between democratic accountability and institutional independence — a clash that could redefine the balance of power in U.S. financial governance for years to come.

(Adapted from CNN.com)

Categories: Economy & Finance, Regulations & Legal, Strategy