U.S. President Trump draws a red line on social media: Anyone who disagrees with the view that interest rates should be lowered when the economy is performing well will never become the Chairman of the Federal Reserve.
The game between the White House and the Federal Reserve has escalated again due to Trump's direct pressure. On December 10, local time, the Federal Reserve announced a 25 basis point reduction in the target range for the federal funds rate to 3.5%-3.75%. This marks the third consecutive rate cut this year, with a total reduction of 75 basis points.
The next day, data released by the U.S. Department of Commerce showed that the U.S. Gross Domestic Product (GDP) grew at an annualized rate of 4.3% in the third quarter of this year.
Faced with unexpected economic growth and ongoing rate cuts, Trump criticized on social media: “In the past, when there was good news, the market would rise; now, when there is good news, the market falls because everyone thinks interest rates will be raised immediately to address ‘potential’ inflation.”
1. Latest Pressure
Since Trump's return to the White House, his conflict with the Federal Reserve has hardly ceased. Recently, this dispute has become more specific and sharp due to a piece of news and an economic data release.
● On December 23, the U.S. Department of Commerce released its first estimate showing that the U.S. GDP grew at an annualized rate of 4.3% in the third quarter. This figure exceeded the expectations of most economists, indicating that the U.S. economy still maintains strong growth momentum.
● Just the day after the economic growth data was released, Trump again pressured the Federal Reserve on social media. He expressed his desire for the Federal Reserve to “lower interest rates when the market is performing well, rather than destroying the market for no reason,” and clearly stated: “Anyone who disagrees with my view will never become the Chairman of the Federal Reserve!”
● This is not the first time Trump has publicly pressured the Federal Reserve. He has previously criticized Fed Chairman Powell as “terrible” and has repeatedly threatened to have Powell “removed.” Trump believes Powell is too slow in cutting rates, which does not align with his policy orientation of stimulating economic growth through low interest rates.
2. Layers of Pressure
Trump's pressure on the Federal Reserve is not a momentary impulse but a layered approach that forms a complete political pressure system.
● The most public and direct form is public opinion pressure. Trump continuously criticizes the Federal Reserve's interest rate policy through social media and public statements. He has repeatedly stated that even without rate cuts, the U.S. is doing well, but it would do even better with rate cuts.
● A deeper layer is personnel arrangements. Trump has repeatedly expressed his intention to break the recent market trend and is eager to nominate a chairman committed to lowering borrowing costs. According to the Financial Times, Trump has narrowed the candidate list to three or four people, including former Fed Governor Kevin Warsh, Treasury Secretary Scott Basset, White House National Economic Council Director Kevin Hassett, and Fed Governor Christopher Waller.
● The most radical step is the legal challenge. According to the New York Times, Trump had drafted a letter to dismiss Fed Chairman Jerome Powell. Although Trump later denied this claim, the action was seen as the most direct challenge to the independence of the Federal Reserve in U.S. presidential history.
3. Political Divisions
The game between the White House and the Federal Reserve has triggered polarized reactions in U.S. politics, directly reflecting the profound contradictions within the U.S. economic governance system.
● Within the Republican Party, lawmakers in charge of financial and budget matters have shown a clear reserved attitude. Banking Committee member Thom Tillis stated: “Ending the independence of the Federal Reserve would be a huge mistake,” and warned that if the chairman were indeed removed, the Senate would “respond quickly.”
● On the Democratic side, there is a general belief that this move undermines the U.S. economic governance mechanism and international credibility, serving as a dangerous signal of “political interference in finance.” Several Democratic senators have explicitly stated that Trump's actions undermine the independence of the Federal Reserve.
● Wall Street and the financial community have expressed widespread concern. Analysts from several financial institutions believe that this move will lead to market volatility and may trigger investor worries about the dollar and U.S. Treasury credit.
4. Economic Dilemma
The decision-making dilemma currently faced by the Federal Reserve stems from the contradictory situation of “stagnation” and “inflation” coexisting in the U.S. economy.
● Strong growth contrasts with persistent inflation. The U.S. GDP grew by 4.3% in the third quarter, but inflationary pressures have not eased. The Fed's preferred PCE index rose by 2.8% year-on-year in September, slightly below expectations but far above the 2% policy target.
● At the same time, the job market has shown signs of cooling. In October, U.S. employers laid off and discharged 1.854 million workers, the highest number since January 2023. This combination of “employment downturn + persistent inflation” has put the Federal Reserve in a dilemma between “protecting jobs” and “controlling inflation.”
● The results of the latest Federal Reserve meeting also reflect this internal contradiction. Of the 12 voting members, 9 supported a rate cut, while 3 voted against it, marking the first time since September 2019. This “stagflation-like” contradiction will long test policymakers, and the Federal Reserve's “wait and see” stance may become a common choice for central banks globally, with the lag in policy response exacerbating market volatility.
5. Succession Battle
As Powell's term is set to end in May 2026, the competition for the next Federal Reserve Chairman has quietly begun.
Trump has narrowed the candidate list to “three to four people.” Among the many potential candidates, several key figures have distinct characteristics:
● Kevin Hassett, as the Director of the National Economic Council, is Trump's core economic advisor, supporting rate cuts and monetary easing.
● Kevin Warsh, a former Fed governor, is referred to in public opinion as a “hawkish representative,” emphasizing inflation control and financial stability.
● Christopher Waller, currently a Fed governor, has a “market-oriented” policy stance, being more flexible between raising and easing rates, seen as a “compromise option.”
● Scott Basset, the current Treasury Secretary, has a market-oriented style, advocating for flexible rates and fiscal coordination, and has been “appointed” by Trump.
The following is a comparison of the potential Federal Reserve Chairman candidates' policy positions:
Whoever ultimately receives the nomination, this new chairman will face the enormous challenge of finding a balance between political pressure and professional judgment.
The S&P 500 index rose for the fourth consecutive day after the GDP data was released, reaching a historic high. This market reaction contradicts Trump's described paradox of “good news being bad news,” suggesting that the market is self-adjusting.
In early December, Trump stated that he had narrowed the list of candidates for the Federal Reserve Chairman nomination to “three to four people” and expected to make a decision soon, announcing it “in the coming weeks.” Kevin Hassett and Kevin Warsh are considered frontrunners for the position, while Christopher Waller has also been interviewed by Trump and received praise.
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