Trump "2.0" challenges the independence of the Federal Reserve, Wall Street nerves are tense

On December 29, as Trump ushered in the “2.0 era,” the Federal Reserve is facing unprecedented political pressure. Trump not only made rare public appearances at the Fed construction site to openly dispute Chairman Powell but also repeatedly criticized its monetary policy, and was even reported to have attempted to weaken Powell’s influence through a “shadow chairman” mechanism, sparking concerns about the central bank’s independence. Reports indicate that Trump accused Powell of “political rate cuts” and directed his criticism at other members of the Federal Open Market Committee (FOMC), including attempts to push for the removal of Fed Governor Cook. The related case is scheduled to be heard in January next year. This move is seen as a significant challenge to the boundaries between the White House and independent institutions. Against this backdrop, insiders within the Fed and related agencies have adopted a “selective silence,” emphasizing that policy decisions are solely based on economic data to avoid further political conflicts. While analysts believe that the Fed’s institutional independence and market oversight remain resilient, successful interference in high-level personnel could once again pressure inflation expectations and market confidence. Meanwhile, the White House is advancing the process of openly selecting the next Fed Chair, raising market concerns that this will undermine Powell’s authority prematurely and deepen internal divisions within the Fed. Wall Street generally believes that short-term policy uncertainty is rising, and the Fed’s century-old independence is under severe test.