A fiery panel discussion on Fox Business this week reignited debates around the role of the Federal Reserve, monetary independence, and the broader implications of the Trump administration’s trade and fiscal policy.
Former World Bank President David Malpass, Heritage Foundation economist E.J. Antoni, and monetary policy expert Judy Shelton joined host Larry Kudlow to dissect Federal Reserve Chairman Jerome Powell’s recent remarks and their growing political implications.
The conversation arrives at a moment of economic turbulence. With the Federal Reserve holding interest rates steady while global central banks ease policy, U.S. President Donald Trump has publicly accused Powell of playing politics and obstructing the country’s economic transformation. The panel didn’t hold back.
Highlights
- Trump accuses Fed Chair Jerome Powell of politicizing interest rate policy and hindering U.S. growth.
- Panelists call for Powell to be fired and for a sweeping reform of the Federal Reserve.
- Judy Shelton criticizes Powell’s “anti-democratic” behavior and calls the Fed “too powerful.”
- Powell’s criticism of Trump’s tariff policy is seen as a political intrusion.
- European Central Bank cuts rates while Powell maintains a hawkish stance.
- China retaliates with airline sanctions amid escalating U.S.-China trade war.
Political Tensions at the Fed
Trump’s frustration with Powell is no secret. At a recent luncheon, he accused the Fed Chair of deliberately keeping interest rates high for political reasons.
“Interest rates should be down now. They should be coming down,” Trump said, contrasting Powell’s policy stance with the rate cuts in Europe. According to the President, Powell is trying to “play cute,” insinuating that the Fed is obstructing his pro-growth agenda.
E.J. Antoni endorsed Trump’s sentiment, suggesting Powell’s record on inflation and interest rate management justifies dismissal. “He botched the job,” Antoni stated.
“He raised rates after explicitly saying he wouldn’t, leading to banking instability and hundreds of billions in unrealized losses.”
Fed Power and Accountability
Judy Shelton, known for her gold-standard advocacy, went further, accusing Powell of undermining the democratic process.
“He ratcheted up the importance of the Fed to the level of an elected president,” she said. “That is profoundly anti-democratic.”
David Malpass echoed the call for a broader upheaval at the Fed. “The Fed is too powerful,” he said.
“They set interest rates, they own unlimited bonds, and they regulate banks. Yet commercial lending hasn’t grown in two years.”
The criticism centered not just on monetary policy but on the Fed’s increasing entanglement in public discourse. Powell’s recent speech in Chicago, in which he warned of economic risks associated with Trump’s tariff policies, was interpreted as an overreach. Kudlow asked pointedly, “Who is Powell to second-guess the President’s trade policy in public?”
Trade Policy and Monetary Strategy
The panel defended Trump’s tariff strategy as a corrective measure against systemic trade abuses. Antoni and Shelton argued that foreign central banks engage in currency manipulation to create unfair trade advantages, which U.S. tariffs aim to counter.
“Currency manipulation is a major aspect of unfair trade,” Shelton asserted. “Trump understands this better than most economists.”
Powell, however, warned that tariffs could fuel inflation and slow growth, claims the panel dismissed as premature and speculative. Kudlow emphasized the uncertainty of the outcome:
“Trump may pull off the most revolutionary trade actions in the last hundred years. Powell doesn’t know what’s going on behind the scenes.”
The Bigger Picture: Economic Models and Institutional Reform
Malpass pointed to a deeper issue: outdated economic models at the Fed. He criticized the Fed’s continued reliance on the Phillips Curve and CPI-based metrics.
“The models have been wrong for 40 years,” he argued. “We need models that facilitate growth, not hamper it.”
The broader concern shared by the panel was the politicization of an institution meant to be independent. With Powell’s term not set to end until 2026 and ongoing Supreme Court reviews of the President’s authority to dismiss independent agency heads, the legal and institutional stakes are high.
Outlook: Central Bank Independence or Reform?
As the Trump administration moves aggressively on trade and begins planning for post-election fiscal reform, the Fed’s role in shaping the macroeconomic narrative is under intense scrutiny. Whether Powell stays or goes, the clamor for reform, from interest rate models to institutional transparency growing louder.
The days of silent central bankers, like Paul Volcker with his iconic cigars, may be gone. But the debate over how visible, vocal, and political they should be has only just begun.
