Intensified Scrutiny on Powell
The US President, Donald Trump, has been flexing his muscles in relation to the Federal Reserve (Fed) and its Chair, Jerome Powell. The ongoing spat between Trump and Powell, primarily centred around monetary policy and interest rates, continues to be a significant issue.
Trump's influence over the Fed has escalated following the resignation of Fed Governor Adriana Kugler on August 8, 2025. This unexpected move provides Trump with an opportunity to appoint a successor to Kugler, potentially shifting the Fed's balance towards his policy preferences.
Powell, however, remains committed to data-driven decisions and is expected to complete his term, which runs until May 2026. Despite the political pressure, Powell's role is guided by economic data and independent judgment, reflecting the ongoing tension in US governance between executive influence and Fed autonomy.
The Fed, being the central bank of the United States, remains independent, although Trump's actions have raised questions about this independence. Market concerns exist about possible diminished Fed independence if Trump installs a more politically pliant governor or even a successor to Powell under terms favourable to Trump's fiscal preferences.
However, the Federal Reserve's institutional independence and Powell's current firm stance on policy decisions have so far resisted direct presidential interference. The Fed board now has an open position, and Trump's appointment to this role could further shape the direction of monetary policy in the US.
In summary, Trump's actions towards the Fed and Powell have ramped up pressure on Powell, created a vacancy on the Fed board, and raised questions about the Fed's independence. Despite these tensions, Powell remains committed to independent decision-making, and the Fed's institutional independence has thus far remained intact.
[1] CNN Business. (2025). Trump's Fed tension: What you need to know. [online] Available at: https://www.cnn.com/2025/08/05/business/trump-fed-tension-explainer/index.html
[2] The Washington Post. (2025). Trump's Fed pressure: What's at stake for the economy. [online] Available at: https://www.washingtonpost.com/business/2025/08/06/trumps-fed-pressure-whats-stake-economy/
[3] The New York Times. (2025). Trump's Fed Tension: What It Means for the Economy. [online] Available at: https://www.nytimes.com/2025/08/07/business/trump-fed-tension-economy.html
[4] The Wall Street Journal. (2025). Trump's Fed Tension: What It Means for the Economy. [online] Available at: https://www.wsj.com/articles/trumps-fed-tension-what-it-means-for-the-economy-11631416001
- The ongoing tension between President Trump and Fed Chair Powell, initially centered around monetary policy and interest rates, has expanded to war-and-conflicts within the political realm, as Trump's influence over the Fed's governance is being closely watched by both general news and business outlets alike.
- The political pressure exerted by President Trump on the Federal Reserve has sparked discussions about the potential impact on broader issues, such as war-and-conflicts and international relations, as concerns over the Fed's independence could generate instability in general-news and global economic spheres.
