Federal Reserve independence at risk from Trump's pressure campaign, J.P. Morgan warns

J.P. Morgan has warned that President Trump's pressure on the Federal Reserve, including threats to fire Chair Powell, could jeopardize the central bank's independence and heighten inflation risks. Trump's calls for significant interest rate cuts to stimulate the economy may lead to politically influenced monetary policy mistakes. The note emphasizes that historical evidence suggests central banks with greater political independence achieve lower inflation, while political interference has previously resulted in economic instability. The potential removal of Powell could undermine market confidence in U.S. monetary policy, exacerbating fiscal challenges.