Opinion: The independence of the Fed is under attack from Trump’s "combination punch," but the president's influence is limited.

On November 5, the Fed is under heavy pressure from Trump's ongoing attacks over the past year. The Fed faces not only Trump's insults and threats to fire Fed Chair Powell but also continued actions to remove Fed Governor Cook, as well as explicit demands for interest rate cuts to alleviate government debt costs—on top of that, Treasury Secretary Basant has accused the Fed of overreach since the financial crisis. However anxious economists may be about the threats to the Fed, the financial markets remained calm throughout 2025. Scholar Francesco Bianchi updated his findings showing that inappropriate remarks made by Trump on social media regarding the Fed during his first term led to a statistically significant decline in the market's expectations of the federal funds rate. The situation in 2025 aligns with this, indicating that the market perceives Trump's threats as “effective,” and that the Fed would respond with interest rate cuts. However, in the long run, the influence of the president's remarks is limited, and there are no signs that the “bond vigilantes” will restrict the president's actions by raising inflation expectations (“bond vigilantes” refer to investors who sell bonds to drive up yields, forcing the government to adjust its policies). Former Fed Governor Randy Kroszner pointed out that the financial markets are hardly worried that Trump's actions will lead to a rise in mid-term inflation rates. Former Treasury Secretary Larry Summers also expressed the view that complaints about the “overreach of the Fed” “do not even rank among the top 100 problems facing the United States.”