“Too Late Jerome”: Trump’s Dangerous Erosion of Central Bank Independence

President Donald Trump’s assault on American institutions continues. Previously, we may have been called “the boy who cry wolf”, but even sensible supporters of Trump can now see that what they voted for is not what they think it would be. For others who continue to follow blindly, perhaps shedding light on his actions would cause them introspection.

So, what is it this time around? It’s Trump’s attack on the American Central Bank. On April 17, he took swipe at Jerome Powell, referring to the Federal Reserve chief’s “termination”.

There’s a reason most central banks are independent: economic stability shouldn’t be subject to political whims. Yet, Trump’s repeated and increasingly aggressive efforts to influence Federal Reserve Chair, going so far as to say “I don’t think he’s doing the job”, mark a dangerous deviation from this norm.

On Thursday, Trump took to Truth Social to blast Federal Reserve Chair Jerome Powell, declaring, “Powell’s termination cannot come fast enough!” With Powell’s term not expiring until May 2026, and legal precedent protecting him from arbitrary dismissal, Trump’s threat is more than political theater. It is a full-throated challenge to the independence of America’s apex bank, at a time when economic headwinds are mounting, inflationary risks are re-emerging, and confidence in stable governance is already fragile.

To understand the gravity of Trump’s attacks on the Federal Reserve, one must appreciate the central bank’s unique role, the painful lessons of economic history, and the dangerous precedent this power struggle threatens to set.

The Federal Reserve’s independence is not a luxury, it’s a cornerstone of macroeconomic stability. As detailed in Edward Chancellor’s 2022 book, “The Price of Time: The Real Story of Interest”, when Congress revised the Fed’s mandate in 1977, it gave it two clear goals: stable prices and maximum employment. Achieving those goals often requires the Fed to make unpopular decisions, especially during inflationary periods, such as raising interest rates and slowing the economy. That’s precisely why central banks must be insulated from short-term political interests.

History offers a stark warning of what happens when they aren’t.

During the 1970s, President Richard Nixon leaned hard on then-Fed Chair Arthur Burns to keep interest rates low before the 1972 election. Transcripts, seen publicly which eventually led to his resignation as President, show Nixon urging Burns to “kick [the Fed governors] in the rump” to get what he wanted. Burns complied. The result? A short-lived boom, followed by runaway inflation that spiraled through the decade. The inflation rate hit double digits in February of 1974 and would stay in double digits until May 1975. The stock market lost about a third of its value from the beginning of the decade to late 1974. In that same year, the unemployment rate was above 7%. Inflation eventually reached 14%. It has been dubbed the Great Inflation.

It took Paul Volcker, appointed in 1979, to restore the Fed’s credibility. He jacked interest rates to nearly 20%, triggering a brutal recession, but crushed inflation and reset expectations. The cost was high, unemployment peaked near 11%, but Volcker’s courage is now hailed as a textbook example of why political insulation is essential for sound monetary policy.

Trump’s disdain for the Fed is not new. During his first term, despite appointing Powell in 2017, Trump turned on him within a year, fuming over the Fed’s modest rate hikes aimed at normalizing post-crisis policy. “I’m doing deals, and I’m not being accommodated by the Fed,” Trump told the Washington Post in 2018, openly expressing a preference for cheap money.

That year, he reportedly considered firing Powell, an unprecedented move in modern U.S. history. His lawyers advised against it, knowing that the Federal Reserve Act restricts the president from removing the Fed chair without cause. The legal firewall held, but the rhetorical bombardment did not stop.

Fast forward to 2025, and the attacks have escalated. Trump now openly questions Powell’s competence, hints he can fire him despite the law, and has a Supreme Court considering a case that could give presidents sweeping authority over independent agency heads. The threat to Fed independence is no longer hypothetical, it is imminent.

Trump’s economic agenda in his second term has reignited inflationary fears. His sweeping import tariffs are pushing up prices across consumer goods. Powell, speaking recently at the Economic Club of Chicago, warned of the challenge: “Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem.”

Yet Trump insists on rate cuts, drawing comparisons to the European Central Bank, which he claims has acted faster and smarter. He accuses Powell of being “always TOO LATE AND WRONG,” a refrain designed to weaken Powell’s credibility and browbeat the Fed into submission.

This creates a no-win scenario for the central bank. If it cuts rates, markets may perceive it as caving to political pressure, eroding trust and sparking inflation. If it holds firm, Trump will ramp up the attacks, further destabilizing markets and confusing the public.

As economist Francesco Bianchi of Johns Hopkins warned, “This request for lower rates could backfire if markets perceive that going forward the Fed will be less committed to low and stable inflation.” Such a shift in expectations could push long-term interest rates higher, raise borrowing costs, and damage economic prospects for years.

Can Trump actually fire Powell? Legally, probably not, at least not without cause. But that may soon change.

The Supreme Court is reviewing a case that could overturn a 90-year precedent (Humphrey’s Executor) that shields independent agency heads from arbitrary dismissal. If the Court sides with Trump’s expansive view of executive power, it could open the door to firing Powell and politicizing the Federal Reserve like never before.

While past administrations have sought to influence Fed policy behind closed doors, Trump’s approach is uniquely confrontational and public. Nixon made private calls. Reagan’s Treasury Secretary voiced concerns delicately. Even George H.W. Bush, frustrated by rate hikes that may have cost him re-election, remained mostly restrained.

Trump, by contrast, weaponizes his pulpit. He criticizes Powell in speeches, social media, and press briefings. He conflates short-term political gain with long-term monetary strategy, and he shows no regard for the institutional norms that underpin market confidence.

Trump’s aggression toward the Fed comes at a perilous moment: economic uncertainty, high public debt, global instability, and weakened democratic institutions. Investors crave clarity. Businesses need policy stability. And the Fed needs room to maneuver, whether by raising rates to curb inflation or slashing them to fight recession.

But if the Fed is perceived as just another extension of the White House, its credibility evaporates.

Peter Conti-Brown of Wharton put it bluntly: “It is extremely difficult to undo the damage Trump is doing.” Even if the Fed does not capitulate, the perception of political influence is corrosive. It undermines the very reason central banks were created in the first place.

An independent Fed helped pull the U.S. out of the 2008 financial crisis with emergency lending and quantitative easing. It steered the economy through COVID-19 with bold, rapid, even if flawed actions. Those decisions required freedom from political backlash. Would a politically neutered Fed have dared to act so decisively?

The United States faces a choice: preserve the hard-won independence of its central bank, or allow a single president’s short-term agenda to compromise it.

What Trump calls “too late Jerome” may someday be remembered, not for delay, but for standing firm in defense of something even more precious than a rate cut: the idea that sound economic policy must outlast any president’s selfish political lifespan.

Why let Trump drag America’s central bank down to the level of Belarus, Russia, or pre-Milei Argentina when it could stand tall like Germany’s or Switzerland’s? His attacks waddle into dangerous territory, while his supporters cower behind him.