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4h ago

Warnings Grow Over White House Pressure on the Federal Reserve

Fresh inflation readings plus a legal fight over a governor's removal raise fears of weakened central‑bank independence.

A shopper browses produce at a grocery store in Buenos Aires in March 2024.
Presidential nominee Richard Nixon poses with a team of economic advisers in San Diego on August 14, 1968, where Nixon and his staff are outlining their full campaign. From left to right: Pierre A. Rinfret, Milton Friedman, Nixon, Arthur Burns and Don Perlberg.
The Marriner S. Eccles Federal Reserve building in Washington, DC, in March 2023.
A pedestrian walks by an advertisement showing Turkish lira banknotes on Istiklal Street in Istanbul, Turkey on December 20, 2021.

Overview

  • Economists Michael Madowitz, Heidi Shierholz and Paul Krugman cautioned that politicizing rate decisions could erode confidence, lift long‑term borrowing costs and push inflation higher.
  • Investor Kevin O’Leary warned that letting the president set interest rates risks hyperinflation, invoking Venezuela as a cautionary example.
  • President Trump attempted to remove Fed Governor Lisa Cook, who has sued over the action; he alleges mortgage fraud, while she says a paperwork issue was a clerical error and she has not been charged.
  • Recent data showed core inflation at 2.9% in August and the Producer Price Index at 3.3%, figures cited by critics as evidence that forced rate cuts could fuel price pressures.
  • The administration installed White House economic official Stephen Miran as a temporary Fed governor, and Treasury Secretary Scott Bessent touted stronger‑than‑expected tariff revenue as funds to reduce debt.