David Wilcox, Columnist

Trump Plan to Politicize the Fed Will Spur Inflation

A proposal from two top nominees would let the president fire board members at will, and give Congress budget authority.

January 10, 2025 at 10:00 AM UTC

By David Wilcox

David Wilcox is director of US economic research at Bloomberg Economics. From 2011 to 2018, he was director of the Federal Reserve Board's Division of Research and Statistics, and served as a senior adviser to three Fed chairs. In the late 1990s, he served as Treasury assistant secretary for economic policy.

Jay Powell should watch his back.
Photographer: Olivier Douliery/Bloomberg

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Imagine it’s January 2026. Federal Reserve Chair Jerome Powell has resisted President Donald Trump's calls on Truth Social for monetary stimulus, and the rest of the board is backing Powell. Using new powers granted him by a Republican Congress, Trump posts again — this time addressed to the entire board and delivering his Apprentice-era catchphrase: “You’re fired.”

To Fed veterans like me, and for all Americans, that would be a terrible outcome: because it probably would lead to higher inflation. Yet under a proposal coauthored by two of Trump’s choices for senior positions in the incoming administration, it could become a reality.