There’s going to be a serious clash between U.S. president-elect Donald Trump and the Federal Reserve in the coming months
Kevin Yin is a contributing columnist for The Globe and Mail and an economics doctoral student at the University of California, Berkeley.
For now, Mr. Trump is unlikely to fire Jerome Powell, the Federal Reserve Chair whom Mr. Trump himself appointed, as it would be fraught with legal challenges and he can simply wait out Mr. Powell’s term, which is set to expire in 2026. However, the president-elect’s worship of the stock market leads him to be extremely dovish on interest rates and willing to chip away at the independence of the central bank to these ends. He has fought with Mr.
Mr. Trump has argued on X that Mr. Powell has a “horrendous lack of vision,” “no guts” and “no sense,” forcing markets to once again speculate about how far the president-elect is willing to go to correct these issues as he sees them. Large incoming tax cuts will drive up aggregate demand while across-the-board tariffs will restrict supply, leading to serious inflation risk as people demand more of goods that are harder to produce.
After 2026, we are facing the prospect of irresponsibly low rates. The term of Mr. Powell’s fellow board governor, who was a mainstream choice for her role, also expires that year. With Mr.
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