Trump Challenges Federal Reserve Independence Amid Policy Conflicts in 2025
In 2025, former President Donald Trump publicly challenged the independence of the Federal Reserve, escalating tensions with Fed Chair Jerome Powell. During a visit to the Fed in Washington, D.C. in July, Trump cited renovation costs estimated at around $3.1 billion, a figure Powell disputed.
Trump also moved to fire Fed Governor Lisa Cook, a Biden appointee. Cook responded by suing to retain her post, and the Supreme Court temporarily blocked the firing. This situation occurred alongside signals from the White House campaign suggesting an unprecedented effort to influence monetary policy and potentially replace Powell.
Tariffs and immigration policies enacted by Trump destabilized inflation and labor market conditions, which affected the Federal Reserve's decisions on interest rates. In response, the Fed began lowering rates in the fall of 2025, setting the target range at 3.5%–3.75%, approximately two percentage points lower than two years prior.
Chair Jerome Powell stated there is no risk-free approach for the central bank, noting that policy moves must consider labor-market risks. His term as chair ends in May 2026, and Trump has expressed interest in two potential successors, Kevin Warsh and Kevin Hassett, who are perceived as more receptive to the president's influence.
In a separate Supreme Court ruling during the same period, the Fed was described as a uniquely structured quasi-private entity, a characterization relevant to ongoing legal debates surrounding its independence.
