After spending much of his first year back in power attempting to bully the Federal Reserve into lowering interest rates, President Donald Trump on Friday said he wants the central bank to be “independent” — as his hand-picked chairman was sworn in to replace ideological foe Jerome Powell atop the bank’s board.
Trump’s fresh outlook on the Federal Reserve came as he spoke in the East Room at the swearing-in ceremony for its incoming Board of Governors Chair, Kevin Warsh.
After calling the Fed “a pillar of the world financial system” and describing the country’s central bank as “highly respected,” Trump said: “I want Kevin to be totally independent, I want them to be independent and just do a great job. Don’t look at me, don’t look at anybody, just do your own thing and do a great job.
“With the support and strong and wise chairmanship at the Federal Reserve, so important America’s future will truly be unlimited with Kevin, with Kevin at the helm,” Trump added as he called Warsh “a special person.”
Trump’s sudden about-face on the Fed’s independence comes after years of attacks on the central bank — and on Warsh’s predecessor, over Powell’s refusal to go along with lower interest rates that would serve political purposes by artificially juicing the U.S. economy.
Despite having appointed Powell to the chairmanship during his first term in the White House, Trump quickly turned on him on social media and in numerous interviews.
After one August 2019 Powell speech that led Trump to take offense, he wrote on Twitter: My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?”
He later berated the Fed for not matching negative interest rates utilized by Europe and Japan, tweeting that the Fed board at the time had “no ‘guts,’ no sense, no vision!”
His attacks on the central bank — and on Powell — continued during his 2024 campaign, during which he accused Powell of being “political” when the board looked to be cutting interest rates as inflation cooled during the last year of the Biden administration.
Once Trump returned to power, he shifted from mere rhetoric to attempts at action that would have compromised the bank’s independence by allowing him to stack the bank’s board with loyalists.
He continued to bully Powell on social media and in public remarks, and even went so far as to order a Department of Justice investigation into whether Powell had lied to Congress about cost overruns in a long-running project to renovate the bank’s Washington headquarters.
Trump also attempted to fire Biden appointee Lisa Cook based on bogus mortgage fraud allegations, though that move has been put on hold with Cook remaining in her job while the Supreme Court considers whether the attempted firing was justified under the law.
After Warsh was given the oath of office by Supreme Court Justice Clarence Thomas, he said he intends to carry out his new role “with energy and purpose” in the mold of Alan Greenspan, the Reagan appointee who was continuously re-appointed to the chairmanship by Presidents George HW Bush, Bill Clinton and George W Bush and served in that role until 2006.
He vowed to lead “a reform-oriented Federal Reserve, learning from past successes and mistakes, both escaping static frameworks and models, and upholding clear standards of integrity and performance.”
“My goal now is to create an environment in which the best people can do their life’s best work, and to face every challenge in the spirit of common purpose and devotion to the national interest, in a word, to excellence,” Warsh said.
