Trump Challenges Federal Reserve Independence Amid Economic Pressures in 2025
In 2025, former President Donald Trump publicly attacked Federal Reserve Chair Jerome Powell and sought political influence over Federal Reserve policy, challenging decades of the institution's independence. During a July 2025 tour of the Federal Reserve headquarters, discussions arose over renovation costs, which increased from an estimated $2.7 billion to about $3.1 billion.
Trump also moved to fire Fed governor Lisa Cook, but the Supreme Court blocked her dismissal, with the case set to be decided in 2026. The Court cited the Federal Reserve as a uniquely structured entity, with the White House testing the defense of central-bank independence.
The 2025 economy faced various pressures including tariffs and immigration actions, which affected inflation and the labor market. To balance inflation and employment, the Fed began cutting interest rates in the fall of 2025, with the policy rate range lowered to 3.5%–3.75%, from 5.25%–5.5% two years prior.
Chair Jerome Powell stated there was no risk-free path for the Fed, with rate adjustments reflecting labor market risks and a cautious approach. Trump targeted a potential new Fed chair, focusing on candidates Kevin Warsh and Kevin Hassett, as Powell's term as chair was set to end in May 2026; noting that the chair holds one vote among twelve.
Economists warned that challenges to the Fed's independence could affect markets and inflation expectations. However, the Fed maintained independence and policy stability throughout 2025 according to analyses.
