Trump Allies Ramp Up Pressure on the Fed: A Deep Dive Into the Political and Economic Battle

• Why Is the Trump Administration Targeting the Federal Reserve?
• Is Jerome Powell Really Running the Fed Alone?
• Would Powell’s Resignation Actually Help the Fed?
• What’s at Stake for the U.S. Economy?
• How Are Markets Reacting to the Uncertainty?
• Could the Fed’s Structure Actually Change?
• What’s Next in This High-Stakes Standoff?
• FAQs: Your Questions Answered

The TRUMP administration is escalating its campaign against the Federal Reserve, with Treasury Secretary Scott Bessent calling for a "top-to-bottom review" of the institution. Meanwhile, prominent economist Mohamed El-Erian suggests Fed Chair Jerome Powell should resign to protect the central bank's autonomy. This article breaks down the high-stakes drama, the risks to Fed independence, and why the markets are on edge.

Why Is the Trump Administration Targeting the Federal Reserve?

The Trump administration isn't just criticizing Jerome Powell—it's questioning the entire Federal Reserve system. Treasury Secretary Scott Bessent fired the latest salvo on Monday, telling CNBC that the Fed’s recent performance warrants a full institutional review. He dismissed concerns about inflation as "tariff fearmongering" and openly mocked Fed economists: "All those PhDs over there, I don’t know what they’re doing." This isn’t just about Powell’s reluctance to cut rates fast enough; it’s a broader challenge to the Fed’s role in economic policy.

Is Jerome Powell Really Running the Fed Alone?

Contrary to popular belief, Powell doesn’t single-handedly dictate Fed policy. The Federal Open Market Committee (FOMC) consists of 12 members—seven Fed governors and five regional bank presidents—who collectively decide interest rates. Tradition dictates that the Fed chair leads the committee, but technically, the FOMC could block a politically charged appointment. This system was designed to insulate monetary policy from political pressure. Yet, with the Trump administration pushing harder than ever, even this safeguard may be tested.

Would Powell’s Resignation Actually Help the Fed?

Mohamed El-Erian, Allianz’s chief economic advisor and a respected voice in global markets, argued on X (formerly Twitter) that Powell should step down—not because he’s failing, but to shield the Fed from further political attacks. "If Chair Powell’s goal is to protect the Fed’s operational autonomy, he should resign," El-Erian wrote. His stance goes against Wall Street’s expectation that Powell will serve until 2026. El-Erian also echoed Bessent’s critique, accusing the Fed of "mission creep"—straying into areas like trade policy that fall outside its mandate.

What’s at Stake for the U.S. Economy?

The real danger isn’t just a headline-grabbing "Powell fired" scenario—it’s the slow erosion of Fed independence. Historically, central banks free from political interference manage inflation and employment more effectively. If the Fed bends to pressure, markets could face prolonged volatility. Investors are already jittery; rumors of Powell’s ouster have circulated for weeks. The question isn’t just who leads the Fed, but whether the institution can maintain its credibility in a hyper-politicized climate.

How Are Markets Reacting to the Uncertainty?

Crypto markets, often seen as a hedge against traditional finance turmoil, have seen increased activity. Data from CoinMarketCap shows bitcoin trading volume spiked 15% amid the Fed drama. Meanwhile, the S&P 500 (tracked via TradingView) has wobbled as traders weigh the risks. "When the Fed’s independence is questioned, every asset class feels the heat," noted a BTCC analyst. "But crypto, with its decentralized ethos, tends to attract nervous capital."

Could the Fed’s Structure Actually Change?

Scott Bessent’s call for a sweeping review raises a radical possibility: a Fed overhaul. While Trump can’t legally fire Powell without cause, his allies could push for legislative changes to the central bank’s mandate. Some Republicans have long wanted to clip the Fed’s wings, and this might be their chance. The irony? The Fed’s current framework—crafted after past political meddling—was meant to prevent exactly this scenario.

What’s Next in This High-Stakes Standoff?

All eyes are on Powell’s next move. Does he dig in, risking a constitutional crisis? Or does he follow El-Erian’s advice and exit stage left? Meanwhile, the FOMC’s other members face their own dilemma: uphold tradition or break ranks to resist political pressure. One thing’s clear—the coming months will test whether the world’s most powerful central bank can stay above the fray.

FAQs: Your Questions Answered

Can Trump legally fire Jerome Powell?

No. The Federal Reserve Act states that a president can only remove a Fed chair "for cause," not over policy disagreements. However, Trump could theoretically pressure Powell to resign.

Why does Fed independence matter?

Decades of research show that politically independent central banks deliver more stable inflation and employment outcomes. When governments interfere, short-term political goals often override sound economics.

How might crypto benefit from Fed turmoil?

Bitcoin and other cryptocurrencies could see increased demand as "hedges" against traditional financial instability. During the 2020 Fed policy shifts, BTC rallied 200% in three months (CoinMarketCap data).