For more than a year, President Donald Trump waged an unusually aggressive and public campaign to bring the Federal Reserve to heel — repeatedly threatening its chair, egging on a criminal investigation, attempting to fire a sitting governor and demanding deep interest rate cuts to juice the economy.
On Wednesday, he discovered just how thoroughly it had backfired.
Jerome H. Powell, in his final news conference as Fed chair, announced he would remain on the central bank’s board of governors for a period to be determined — a direct consequence of the administration’s legal assaults on the institution. The decision denies the White House a crucial seat on the Fed’s seven-member board, probably delaying Trump’s ambitions to make sweeping changes to the central bank. Unless another governor leaves, Trump won’t have another vacancy to fill until Powell’s term as governor expires in January 2028.
Powell’s act of institutional resistance may not be the last. The central bank’s rate-setting committee split in an 8-4 vote to keep interest rates unchanged — the most number of dissents since 1992, before the central bank immediately disclosed its policy moves. Three of the four dissenters were regional Fed bank presidents who backed standing pat on rates but signaled they had no appetite to resume cutting rates, as the White House has demanded.
The upshot is that the Fed is girding for a sustained confrontation that Trump’s own actions helped engineer, analysts said.
“So far, the Fed’s resistance has been effective — more so probably than at any other agency — and my sense is Trump finds that intensely frustrating,” said David Wilcox, a senior fellow at the Peterson Institute for International Economics and director of U.S. economic research at Bloomberg Economics. The legislative protections put in place to insulate the Fed from political control — some dating to 1913, others to 1935 — were well designed, he said.
It is not the first time a president has discovered that pressuring the Fed tends to produce the opposite of the intended result. Only Richard M. Nixon managed it, quietly pressuring Fed Chair Arthur Burns to hold rates down ahead of his 1972 reelection, in part by planting a false news story that the Fed chief had privately sought a pay raise. Burns acquiesced, but the episode helped fuel a decade of runaway inflation, ultimately requiring painful interest rate hikes to bring prices back under control.
Others fared no better than Trump. Harry S. Truman summoned the Fed’s entire policymaking committee to the White House in a tense standoff over interest rates — which led to a landmark accord affirming the central bank’s independence. George H.W. Bush called for lower rates as a recession took hold; they didn’t come, and he later blamed tight monetary policy for costing him reelection.
Trump, in his first term, repeatedly assailed Powell on social media and mused to aides about whether he could fire him. The Fed did not change course, and Powell generally ignored the president’s barbs.
When Trump returned to the White House last year, he tried a more aggressive approach — repeatedly flirting with trying to fire Powell; attempting to fire another Fed governor, Lisa Cook; and later egging on the Justice Department’s criminal investigation into Powell and cost overruns tied to renovations of the Fed’s Washington headquarters. Powell and Cook have denied wrongdoing.
A federal judge in March blocked a pair of grand jury subpoenas tied to the DOJ probe after prosecutors acknowledged in a sealed hearing that they lacked evidence of fraud or wrongdoing. The probe was dropped last week. But the prosecutor, U.S. Attorney for D.C. Jeanine Pirro, has said she wouldn’t hesitate to reopen the matter if the Fed’s internal watchdog — which was already reviewing the renovation costs at Powell’s request — makes a criminal referral.
Powell said Wednesday that he is staying until the investigation is “well and truly over with transparency and finality” — a phrase he had previously used — and that months of legal pressure had left him “no choice.”
By staying, Powell blocks Trump from filling another board seat. Kevin Warsh — whose nomination the Senate Banking Committee advanced Wednesday on a 13-11 party-line vote — will take the seat of outgoing governor Stephen Miran, not Powell’s.
Trump was dismissive, taking to social media to say Powell was staying only because “he can’t get a job anywhere else — Nobody wants him.” Treasury Secretary Scott Bessent also criticized Powell, saying he was violating “all Federal Reserve norms.”
Trump said Thursday: “If he stays on, he stays on. I just wanted to make sure that Kevin became the head.”
Three of the four dissenters on this week’s interest rate decision — Beth Hammack of Cleveland, Neel Kashkari of Minneapolis and Lorie Logan of Dallas — opposed not the rate decision itself but language in the policy statement implying a future bias toward cuts, which some Fed watchers described as a direct rebuff to White House pressure.
Patrick Harker, who served as the Philadelphia Fed president for a decade before retiring last year, said political pressure from the White House tended to produce the opposite of its intended effect — at least on him. If anything, he said, it made him more skeptical.
“If somebody is coming to you just desperate for something,” he said, “don’t you react and say, ‘Huh — what’s the motivation?’”
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