What happens if Trump takes over the Fed
https://www.nytimes.com/2025/07/17/business/trump-powell-fed-global-reaction.html
Trumps Attack on the Fed Ripples Through the Global Economy
The independence of central banks, which allows policymakers to operate free from political meddling, is considered sacrosanct by investors and economists.
By Eshe Nelson
July 17, 2025, 11:07 a.m. ET
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Turmoil in U.S. financial markets risks upending the finances of countries and companies abroad. The yields on long-term U.S. government debt, which serve as benchmarks for interest rates around the world, could spike if Mr. Trump were to fire Mr. Powell, economists warn. The value of the dollar could sink.
Many central banks hold a large share of their reserves in dollars and dollar-denominated assets. The dollar is also the dominant form of global payment, on one side of nearly 90 percent of all cross-border transactions, according to the Bank for International Settlements, the bank for central banks.
In the past, when central banks have succumbed to political pressure in many cases, the record is not good, said Mr. Ingves, the former Swedish central bank chief.
It has led to devastating effects on inflation for citizens and companies, oftentimes bringing countries to a brink, Agustín Carstens, the former general manager of the Bank of International Settlements, said recently.
Turkey is often used as the sharpest example of the cost of interfering with a central banks independence.
For years, President Recep Tayyip Erdogan pressured Turkeys central bank to cut interest rates, even as inflation soared and the countrys currency plummeted.
Mr. Erdogan has repeatedly pushed out policymakers who opposed his demands Turkey has had five central bank governors in the past six years. Over that time, the countrys inflation rate climbed above 80 percent, and it remains at a punishingly high level of 35 percent.
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