Trump "2.0" Challenges Fed's Independence, Wall Street on Edge

December 29 As Trump launches his “2.0 era,” the Federal Reserve faces unprecedented political pressure. Trump has publicly clashed with Fed Chair Jerome Powell (rarely in public settings, per reports) and repeatedly criticized the central bank’s monetary policy. He has also been reported to seek undermining Powell’s influence via a “shadow chairman” arrangement, raising market concerns about the Fed’s independence. Reports note Trump has accused Powell of “politically motivated rate cuts” and targeted other Federal Open Market Committee (FOMC) members—including efforts to oust Fed Governor Lisa Cook. The case is set for trial in January 2025, marking a major test of the line between the White House and independent federal agencies. Against this backdrop, a pattern of “selective silence” has emerged among Fed officials and staff, who stress policy is rooted solely in economic data to avoid further political friction. While analysts say the Fed’s institutional independence and market oversight remain strong, successful high-level interference in personnel could again pressure inflation expectations and market confidence. Meanwhile, the White House is moving forward with public vetting for the next Fed chair, sparking market worries this could prematurely erode Powell’s authority and deepen internal Fed divisions. Wall Street broadly sees short-term policy uncertainty rising, with the Fed’s century-old independence facing a critical test.