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    Trump is out to end the Fed’s autonomy. Here’s how he’s trying to get his way

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    When Donald Trump stepped up his campaign to influence the US Federal Reserve, he traveled less than a mile from the White House, to tour the central bank’s headquarters. But as the administration considers how to actually get what it wants, one of the US president’s acolytes looked about 500 miles south.A condominium above the Four Seasons hotel in Atlanta, Georgia, is at the heart of an extraordinary battle over the future of the Fed, and the independence of its power of the world’s largest economy.For a generation, presidents have respected the Fed’s autonomy. They might disagree with its decisions. But they allowed it to make long-term calls in the best interest of the economy, even if they caused short-term political discomfort.Trump has ignored this precedent.Since returning to office in January, he has lambasted the Fed publicly and relentlessly – calling its chairperson, Jerome Powell, a “moron”, a “numbskull” and a “disaster” – and accused the central bank of damaging the US economy by failing to cut interest rates.As the Fed declined to lower rates at five consecutive meetings, Trump escalated his attacks, even suggesting (without evidence) that multi-billion dollar renovations of its Washington headquarters were tantamount to fraud.But policymakers held the line. With most rate-setting officials wanting to wait and see the impact of Trump’s policies – from trade wars to deportations – on the economy, they sat on their hands.While the Fed might be on the cusp of resuming rate cuts, Powell has made clear rates are unlikely to fall as drastically as the president wants.So how does Trump actually get what he wants?Back to that condo in Atlanta. It was allegedly bought by Lisa Cook, a respected economist appointed by Joe Biden to serve on the Fed’s board of governors, in July 2021. Trump’s officials claim she took out a mortgage which listed the property as her primary residence – two weeks after taking out another mortgage, which listed a property in Ann Arbor, Michigan, as her principal residence.The allegations – similar to those that the administration has leveled against other opponents – are unconfirmed. But that didn’t stop Trump from immediately demanding Cook’s resignation.When Cook refused to be “bullied”, he tried to fire her. Cook has insisted Trump has no authority to do so, and her attorney has pledged to sue the administration over its bid to remove her from her post.The Fed’s rate-setting Federal Open Market Committee (FOMC) is in Trump’s sights. There are 12 seats around the table, filled by five representatives of local reserve banks and seven governors.Fed governors, once appointed, are hard to replace. A full term lasts 14 years, enabling them – in theory – to take a longer view on the economy than, say, presidential administrations working on four-year cycles.Cook’s term is not due to expire until 2038. It now appears likely that her future at the Fed will be settled in court. But Trump’s bid to exert control over the central bank, and its rate-setting committee, does not end there.He has already nominated one ally to sit on the Fed’s board of governors, following the exit of Adriana Kugler, another Biden appointee, earlier this month. Two other governors have already publicly sided with the president on rate cuts, and reportedly made the administration’s shortlist of potential successors to Powell.Powell’s term as Fed chair is due to end in May. His term as a governor is not due to expire until January 2028, but departing chairs have typically left the board at the same time.The Fed has so far defied Trump’s demands. But each departure enables him to build his influence over its policy committee – with view to obtaining an outright majority. Like the supreme court, these nominations have implications for years to come.The administration is arguing a mortgage on a condo in Atlanta should allow it handpick another official to join the Fed’s board. Who knows what the next purported reason will be, should it have another go.Trump has made no secret of this plan. “We’ll have a majority very shortly,” he claimed to reporters at a cabinet meeting on Tuesday. “So that’ll be great.”Of course, receiving his backing today does not guarantee his support tomorrow.Eight years ago, when he tapped Powell to lead the Fed, the president delivered a strikingly different verdict to the ones he now routinely publishes on social media. “He’s strong, he’s committed and he’s smart,” said Trump. More

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      Who is Lisa Cook, the Fed governor facing removal by Trump?

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      Lisa Cook, the first Black woman to sit on the Federal Reserve’s board of governors, is now facing removal by Donald Trump, another obstacle in a long line she has faced and written about during her experiences as one of a small number of Black women in the field of economics.Cook was nominated to the Fed in 2022 by then president Joe Biden after building a career that spanned both government and academia, including work at the treasury department, service in the White House, and a long record of scholarly contributions.But her path to confirmation wasn’t without hostility. Republicans opposed her nomination, forcing Vice-President Kamala Harris to break a 50–50 Senate deadlock. That narrow vote made Cook the first, and so far the only, Black woman to serve as a Fed governor.Her potential dismissal comes just days after federal housing finance agency director Bill Pulte alleged on social media that she falsified records and other documents to obtain favorable mortgage terms prior to her appointment. Cook has not been charged with a crime or found guilty of misconduct.By law, governors on the Fed’s board are appointed to 14-year terms and can only be removed for “cause”, generally understood to mean corruption or serious wrongdoing. Cook has continued to push back. Last week, she declared she had “no intention of being bullied” and promised to gather “accurate information to answer any legitimate questions and provide the facts”.In a statement on Tuesday, she insisted that “no cause exists under the law, and he [Trump] has no authority” to strip her of the seat she has held since 2022. Her attorney has said they intend to sue.Since joining the board, Cook has consistently voted in line with chair Jerome Powell, supporting last year’s decision to cut interest rates and this year’s decision to hold them steady. She is sometimes described as a “dove”, a label economists use for officials who lean toward lower rates.Cook was born in Georgia, where she was raised by a hospital chaplain and a nursing professor. She and her sisters were among the first Black students to integrate their schools.She went on to study at Spelman College, then Oxford University as a Marshall scholar, before earning her PhD in economics from the University of California, Berkeley, in 1997.Her academic work often linked economics with the realities of race and discrimination. One of her most recognized works, Violence and economic activity: evidence from African American patents, described how lynchings and other acts of racial violence in the late 1800s and early 1900s drastically reduced patent activity among Black inventors.Cook has also written candidly about the challenges she has faced in her profession. In a 2019 opinion piece in the New York Times, she and a co-author argued that “economics is neither a welcoming nor a supportive profession for women”.She added: “But if economics is hostile to women, it is especially antagonistic to Black women.” More

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      What Trump’s move to fire Fed governor means for central bank’s independence

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      Donald Trump has said he is firing Lisa Cook, a Federal Reserve governor, in a move viewed as a sharp escalation in his battle to exert greater control over the independent institution.Trump said in a letter posted on his Truth Social platform that he is firing Cook because of allegations she committed mortgage fraud. The allegation was made last week by Bill Pulte, a Trump appointee to the Federal Housing Administration, an agency that regulates mortgage giants Fannie Mae and Freddie Mac.Cook previously said she would not leave her post.Trump has repeatedly attacked the Fed’s chair, Jerome Powell, for not cutting its short-term interest rate, and even threatened to fire him. Powell, who has previously warned that tariffs will push up inflation, told the Jackson Hole economic symposium in Wyoming last week that the Fed could soon change its policy stance.Powell’s caution has infuriated Trump, who has demanded the Fed cut borrowing costs to spur the economy and reduce the interest rates the federal government pays on its debt. Trump has also accused Powell of mismanaging the US central bank’s $2.5bn building renovation project.Firing the Fed chair or forcing out a governor threatens the Fed’s venerated independence, which has long been supported by most economists and Wall Street investors. Here’s what to know about the Fed:The Fed wields extensive power over the US economy. By cutting the short-term interest rate it controls – which it typically does when the economy falters – the Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the rate – which it does to cool the economy and combat inflation – it can weaken the economy and cause job losses.Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Arthur Burns, former Fed chair, has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.Paul Volcker was eventually appointed chair of the Fed in 1979 by Jimmy Carter, and he pushed the Fed’s short-term rate to the stunningly high level of nearly 20%. (It is currently 4.3%). The eye-popping rates triggered a sharp recession, pushed unemployment to nearly 11% and spurred widespread protests.Yet Volcker didn’t flinch. By the mid-1980s, inflation had fallen back into the low single digits. Volcker’s willingness to inflict pain on the economy to throttle inflation is seen by most economists as a key example of the value of an independent Fed.An effort to fire Powell would almost certainly cause stock prices to fall and bond yields to spike higher, pushing up interest rates on government debt and raising borrowing costs for mortgages, auto loans and credit card debt. The interest rate on the 10-year treasury is a benchmark for mortgage rates.Most investors prefer an independent Fed, partly because it typically manages inflation better without being influenced by politics but also because its decisions are more predictable. Fed officials often publicly discuss how they would alter interest rate policies if economic conditions changed.If the Fed was more swayed by politics, it would be harder for financial markets to anticipate – or understand – its decisions.The supreme court in a ruling earlier this year suggested that a president can’t fire the chair of the Fed just because he doesn’t like the chair’s policy choices. But he may be able to remove him “for cause”, typically interpreted to mean some kind of wrongdoing or negligence.It’s a likely reason the Trump administration has zeroed in on the building renovation, in hopes it could provide a “for cause” pretext. Still, Powell would likely fight any attempt to remove him, and the case could wind up at the supreme court. More

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      ‘Pattern of lawfare’: Trump is targeting opponents with mortgage fraud claims

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      Donald Trump and his allies have been accused of executing a “pattern of lawfare” akin to those exerted by authoritarian regimes in Hungary and Russia after adopting a new strategy to target political opponents: allegations of mortgage fraud.First it was Letitia James, the New York attorney general, then it was Adam Schiff, a California senator. Now, the president is targeting Federal Reserve governor Lisa Cook, demanding she resign and threatening to fire her.Cook, the first Black woman to be appointed a Fed governor, was appointed in 2022 by Joe Biden. Her 14-year term is not due to expire until 2038.Leading this new strategy is Bill Pulte, heir to a home construction company fortune, appointed by Trump to lead the Federal Housing Finance Agency, which oversees regulations of federal housing lenders Fannie Mae and Freddie Mac.Pulte has used his role to publicly accuse Trump’s opponents, publishing extraordinary allegations on social media and referring them for investigation.He alleges that James, Schiff and Cook committed what is known as owner-occupancy fraud, when a person claims a second home or investment property is actually a primary residence to get better mortgages. Lenders are more inclined to give borrowers a lower mortgage on a primary residence, compared with a second home or investment property.In a letter to the Department of Justice, Pulte claimed that Cook “falsified bank documents and property records to acquire more favorable loan terms”. In other online posts and on TV news appearances, Pulte said that Cook should resign or be fired over the allegations, which have not been verified.James and Schiff have denied the allegations. Cook has pledged to “provide the facts” after gathering the relevant information.Trump allies have celebrated the accusations, citing it as evidence of corruption within the Democratic party. “This is not just hypocrisy, this is poetic justice,” said Fox conservative commentator Laura Ingraham, of Schiff’s fraud accusations, in a clip Trump reposted to social media.While Pulte has targeted two prominent Democrats and a Democratic appointee, accusations of such fraud are not exclusive to the party: an investigation by the Associated Press found Texas attorney general Ken Paxton, a Republican and staunch Trump ally, and his then wife claimed that three homes were their primary residences.View image in fullscreenThough Paxton has not commented on his own mortgage fraud accusations, he had said of the accusations against attorney general James: “I hope that if she’s done something wrong, I hope that she’s held accountable.”Owner-occupancy fraud is not uncommon. Philadelphia Fed researchers in 2023 estimated that over 20,000 loans were given to “fraudulent investors”, or people who purchased more than one home they listed as a primary residence within a year.Some political experts have raised concerns that the president and his allies are blatantly using the legal system to intimidate political opponents. “The fact that the law is being selectively applied underlines that this is part of a pattern of lawfare,” Don Moynihan, a professor of public policy at the University of Michigan, told the Guardian via email.“What we are seeing is the type of weaponization we associate with authoritarian regimes, like Hungary, Turkey or Russia,” Moynihan added. “I would say that this is a massive warning sign, but the reality is that we have seen so many of these signs at this point.”Contacted for comment, a US federal housing spokesperson said: “We refer people of all political parties for mortgage fraud, and we will continue to do so.”A White House official said: “Anyone who engages in criminal activity should be held accountable. No one is above the law.”‘No intention of being bullied’That Trump is targeting a Fed governor speaks to the president’s continued antagonism against the Federal Reserve. Compared with James or Schiff, both of whom have headed investigations against Trump, Cook has not singled herself out as an enemy to the president.But her role on the 12-person Fed governing board that sets interest rates has probably made her a target. Since taking office in January, Trump has demanded the central bank cut rates, disregarding the precedent set by his predecessors; the Fed has historically been treated as an independent institution, free from political influence, by past presidents.The Fed board hasn’t yet lowered rates during any of the five meetings it had this year, which has infuriated Trump. Policymakers, including the central bank’s chair, Jerome Powell, say the administration’s tariffs have clouded the economic outlook and raises the risk of higher inflation.Pulte has pushed himself into the heart of the action, criticizing the Fed on social media and reportedly even drafting a letter for Trump – which remains unsent – to fire Powell. “Jerome Powell’s career is done,” Pulte wrote in July.View image in fullscreen“Could somebody please inform Jerome ‘Too Late’ Powell that he is hurting the housing industry very badly? People can’t get a mortgage because of him,” Trump wrote on social media earlier this week.Trump’s gut-reaction to seize control of the Fed is to fire Powell, but neither the stock market nor the US supreme court have responded kindly to such threats. So, Trump, with Pulte’s help, has spent the summer following other tactics.In July, Trump zeroed in on renovations that were taking place at the Fed’s headquarters in Washington DC, claiming that the renovations were fraudulent because they were more expensive than what was originally budgeted, costing $2.5bn instead of $1.9bn. The Fed put this down to complications that came up during renovations.But as criticisms of the renovations died down, Trump started zeroing in on Cook. Her exit would allow Trump to appoint a replacement who may be more sympathetic to his desire for lower rates.In a statement, Cook said that she has “no intention of being bullied to step down from my position because of some questions raised in a tweet”, adding: “I do intend to take any questions about my financial history seriously as a member of the Federal Reserve and so I am gathering the accurate information to answer any legitimate questions and provide the facts.”On Friday, Trump threatened to fire her if she did not resign. More

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      Federal Reserve set to cut interest rates – but still Trump won’t be happy

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      Stocks soared on Friday following the strongest signal yet that US the Federal Reserve is gearing up to start cutting interest rates again this fall. But how long can this celebration last?While Wall Street cheered the biggest headline from the speech by the Fed chair, Jerome Powell, at the annual Jackson Hole symposium in Wyoming, Powell also delivered a reality check on where interest rates could settle in the longer term.“We cannot say for certain where rates will settle out over the longer run, but their neutral level may now be higher than during the 2010s,” said Powell.In other words: even if the Fed does start cutting interest rates again this year, they may not fall back to their pre-pandemic levels. It’s a signal, despite the short-term optimism on potential rate cuts, that the Fed’s long-term outlook is more unstable.“Markets might be ahead of their skis on how aggressive the Fed is going to be in reducing interest rates, because the neutral rate might be higher than some believe,” Ryan Sweet, an economist at Oxford Economics, said.Higher rates means borrowing money for loans, such as mortgages, will be more expensive. The average 30-year fixed mortgage rate was just under 3% in 2021, when interest rates were near zero.Now the average mortgage rate is closer to 6.7%. Paired with home prices at near-record highs, elevated mortgages mean many Americans will continue to struggle to purchase a home.Although Trump has been pushing the Fed for months to decrease rates to 1%, claiming that Powell is “hurting the housing industry very badly”, it seems unlikely that rates will return to such a level any time soon.The Fed is trying to achieve a Goldilocks balance. Rates that are too high risk unemployment, while rates that are too low could mean higher inflation. Policymakers are searching for a “neutral” level, where everything is just right.Many economists believed the central bank was close to achieving this balance before Trump started his second term. In summer 2022, as inflation scaled its highest levels in a generation, the Fed started raising rates, at the risk of hurting the labor market, in an attempt to get inflation down to 2%.Rates rose to about 5.3% in less than two years, but the jobs market remained strong. Unemployment was still at historically low even as inflation came down. Although some economists had feared rapidly increasing rates would throw the US economy into a recession, instead the Fed appeared to achieve what is known as a “soft landing”.But things were thrown into a tailspin when Trump returned to office, armed with campaign promises to enact a full-blown trade war against the US’s key trading partners.The president has long argued that tariffs would boost American manufacturing and set the stage for better trade deals. “Tariffs don’t cause inflation. They cause success,” Trump declared back in January, acknowledging that there might be “some temporary, short-term disruption”.But so far, success has been limited. Economists doubt the policies will generate a manufacturing renaissance, and Trump’s trade war has inspired new commercial alliances that exclude the US.All the while, US consumers are starting to see higher prices due to Trump’s tariffs.At Jackson Hole on Friday, Powell said tariffs had started to push some prices up. In June and July, inflation was 2.7% – up 0.4 percentage points since April, when Trump first announced the bulk of his tariffs.This is still only a modest increase in price growth, but the bulk of the White House’s highest tariffs only went into effect in early August. Fed policymakers are waiting to see whether Trump’s aggressive trade strategy will cause a one-time shift in price levels – or if the effects will continue.The once strong labor market has grown sluggish. Though there are fewer job openings, there are also fewer people looking for jobs. Powell called it “a curious kind of balance” where “both the supply of and demand for workers” have slowed. He noted that the balance was unstable and could eventually tip over, prompting more layoffs and a rise in unemployment.This instability in the labor market has made Fed officials more open to a rate cut. Powell pointed to a slacking in consumer spending and weaker gross domestic product (GDP), which suggests an overall slowdown in economic activity.Although it set the stage for a rate cut as soon as next month, Powell’s speech was far from optimistic.“In this environment, distinguishing cyclical developments from trends, or structural developments is difficult,” he said. “Monetary policy can work to stabilise cyclical fluctuations but can do little to alter structural changes.”From Powell, who is typically diplomatic and reserved in his public statements, this seemed to be a careful warning: when executive policies destabilise the economy, the Fed can only do so much to limit the damage. More

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      Trump tussles with Jerome Powell on rare visit to Federal Reserve

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      Donald Trump sparred with the Federal Reserve chair, Jerome Powell, on Thursday during a rare presidential visit to the central bank’s headquarters.Trump was continuing his campaign to pressure the Fed to cut interest rates and was visiting its Washington headquarters to view costly renovations he has suggested are tantamount to fraud.Having branded Powell a “numbskull” for the Fed’s recent decisions not to cut rates, Trump has turned up the pressure on Powell with criticism of the $2.5bn bill for renovating the Fed’s historical buildings.Powell and Trump stood in hard hats inside the Fed’s construction site. Urging the Fed chair to stand closer to him, Trump alleged that the bill for the renovations would now cost $3.1bn.“It looks like it’s about $3.1bn – it went up a little bit or a lot,” said Trump. The usually unflappable Powell looked visibly irritated, closed his eyes and shook his head. “I am not aware of that,” said Powell.Handed a piece of paper by Trump, Powell scanned it and said the new figure included the cost of renovations for the Martin Building, a different Fed office that was renovated five years ago. “It’s not new,” said Powell.Asked by a reporter what he would do if a project manager went over budget, Trump said: “I’d fire him.“Look, I would love to see it completed,” Trump said. “I don’t want to put that in this category.”The president backed away from earlier statements in which he had suggested he would fire Powell, a suggestion that has rattled stock markets. Trump said: “To do that is a big move, and I just don’t think it’s necessary, and I believe he’s going to do the right thing.”The visit to the Fed comes less than a week before the central bank’s 19 policymakers gather for a two-day rate-setting meeting, where they are widely expected to leave the central bank’s benchmark interest rate in the 4.25%-4.50% range.Trump has demanded that the Fed lower rates by three percentage points. Trump has repeatedly demanded that Powell slash US interest rates and has frequently raised the possibility of firing him.Ahead of Trump’s visit, Fed staff escorted a small group of reporters around the construction sites. They wove around cement mixers and construction machines, and spoke over the sound of drills, banging and saws.Fed staff pointed out security features, including blast-resistant windows, that they said were a significant driver of costs, in addition to tariffs and escalations in material and labor costs.Reuters contributed to this story More

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      OpenAI CEO tells Federal Reserve confab that entire job categories will disappear due to AI

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      During his latest trip to Washington, OpenAI’s chief executive, Sam Altman, painted a sweeping vision of an AI-dominated future in which entire job categories disappear, presidents follow ChatGPT’s recommendations and hostile nations wield artificial intelligence as a weapon of mass destruction, all while positioning his company as the indispensable architect of humanity’s technological destiny.Speaking at the Capital Framework for Large Banks conference at the Federal Reserve board of governors, Altman told the crowd that certain job categories would be completely eliminated by AI advancement.“Some areas, again, I think just like totally, totally gone,” he said, singling out customer support roles. “That’s a category where I just say, you know what, when you call customer support, you’re on target and AI, and that’s fine.”The OpenAI founder described the transformation of customer service as already complete, telling the Federal Reserve vice-chair for supervision, Michelle Bowman: “Now you call one of these things and AI answers. It’s like a super-smart, capable person. There’s no phone tree, there’s no transfers. It can do everything that any customer support agent at that company could do. It does not make mistakes. It’s very quick. You call once, the thing just happens, it’s done.”The OpenAI founder then turned to healthcare, making the suggestion that AI’s diagnostic capabilities had surpassed human doctors, but wouldn’t go so far as to accept the superior performer as the sole purveyor of healthcare.“ChatGPT today, by the way, most of the time, can give you better – it’s like, a better diagnostician than most doctors in the world,” he said. “Yet people still go to doctors, and I am not, like, maybe I’m a dinosaur here, but I really do not want to, like, entrust my medical fate to ChatGPT with no human doctor in the loop.”His visit to Washington was aligned with the Trump administration’s unveiling of its “AI action plan”, which is focused defining and easing some regulations and promoting more datacenters. Altman’s latest engagement is with the federal government under Donald Trump, which has taken on a new tune compared with years past. While much has changed with the tech over the years, under the Biden administration, OpenAI and its rivals asked the government to regulate AI. Meanwhile under Trump, they talk of accelerating to beat China.At the fireside chat, he said one of his biggest worries was over AI’s rapidly advancing destructive capabilities, with one scenario that kept him up at night being a hostile nation using these weapons to attack the US financial system. And despite being in awe of advances in voice cloning, Altman warned the crowd about how that same benefit could enable sophisticated fraud and identity theft, considering that “there are still some financial institutions that will accept the voiceprint as authentication”.skip past newsletter promotionafter newsletter promotionOpenAI and Altman are already under way on their big pivot to Washington, attempting to crash a party at which Elon Musk once held the golden ticket. Along with announcing plans to open his company’s first office in Washington next year, Altman faced the Senate commerce committee for his first congressional testimony since his high-profile appearance in May 2023 that propelled him on to the global stage. More

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      Trump takes on the Fed – but he has little power over central bank, economists say

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      For months, Donald Trump has ranted on social media and, at one point, threatened to fire the Federal Reserve chair, Jerome Powell. Last week, he took on a new, unusual tactic: a handwritten note.“You have cost the USA a fortune and continue to do so. You should lower the rate – by a lot!” Trump wrote to Powell, whom he calls “Too Late” in one of his less compelling nicknames.That Trump has targeted the Fed isn’t surprising. In the midst of Trump’s trade war, consumers and business owners alike have expressed anxiety about the economy. The stock market tanked in April, when the president announced the highest of his tariffs, and only went on the upswing when he pulled back the bulk of his levies.The Fed has the ability to sway the US economy through its ability to adjust interest rates. When rates are high, as they have been for the last few years, borrowing money becomes more expensive. This means higher rates for mortgages, business loans, credit card debt and more. People are less likely to invest when interest rates are high, which can slow activity in the economy. The Fed lowering interest rates would excite investors and spur economic activity, but the price could be steep in the long run.But how much sway does Trump really have over the Fed?While Trump’s aggression toward the Fed, particularly his personal attacks against Powell, are a remarkable departure from the relationship a US president typically has with the Fed, economists say the structure of the central bank limits the amount of power Trump actually has – at least in the short term.Historically, the Fed has been a nonpartisan, independent central bank within the federal government. Economists have found that countries without central banks are prone to high inflation and unemployment.“A central bank’s independence is pretty much the only thing macroeconomists know of that’s a free lunch,” said Jason Furman, a former economic adviser to Barack Obama. “When you look at authoritarian leaders that have effectively taken over the central banks, like in Turkey, you can end up with 70% inflation rates and really, really big economic problems.”In late June, Trump told reporters that he has zeroed in on “three or four people who I’m going to pick” to replace Powell. When the treasury secretary, Scott Bessent, whose name has been floated, was asked if he would take the job, Bessent said: “I will do what the president wants.”That the White House is already talking about replacing Powell almost a year out from the end of his term has raised concerns that a new appointee would act as Trump’s “shadow chair”, or someone who has power over Powell before he leaves office.But those familiar with the Fed’s structure say that a powerful “shadow chair” is unlikely, especially since the Fed’s structure encourages consensus among its leaders.When setting interest rates, the Fed chair doesn’t act alone. The chair is one of 12 members of the Federal Open Market Committee (FOMC), which meets eight times a year to vote on any adjustments to the interest rate.The amount of control Trump has over who gets on to the FOMC is limited. The committee has seven Fed governors who serve 14-year terms. Those governors are appointed by the president and confirmed by the Senate. The other five members are presidents of regional Federal Reserve banks, who are selected within the Federal Reserve system.During the next four years, because of upcoming term limits, Trump will have the ability to appoint two of the 12 members of the FOMC – what would be a small fraction of the committee.“They’re going to have a hard time persuading other people on the committee to go along with anything like what Trump wants,” Furman said.skip past newsletter promotionafter newsletter promotionRyan Sweet, chief US economist for Oxford Economics, said that Fed governors on the FOMC already voice dissenting views on the economy in public, but come together to form a consensus during their meetings.“It’s built [into the Fed] that they go into a meeting and they’ve got to come to a consensus on what the outcome is,” Sweet said.And even though Trump may want to replace Powell before his term is up, the supreme court signaled that the president can’t constitutionally fire him. Sweet pointed out that the court’s preemptive protection of the Fed chair has likely soothed stock markets, which had gone into a panic when Trump first threatened to oust Powell.Powell, whom Trump first appointed in 2018, has publicly resisted the president’s efforts to sway the Fed. He has said he would not step down if Trump asks and has said the Fed will not lower interest rates prematurely, at risk of raising inflation.In his most pointed statement against Trump’s economic policies, Powell said that the Fed paused interest rate cuts “when we saw the size of the tariffs”.“Essentially all inflation forecasts for the United States went up materially as a consequence of tariffs,” Powell said. “We didn’t overreact, in fact we didn’t react at all.” This article was amended on 7 July 2025. Powell said the Fed paused interest rate cuts due to Trump’s tariffs, not interest rate increases. More