The president of the Federal Reserve Bank, Jerome Powell, announces that interest rates will remain unchanged during a press conference in the building William McChesney Martin of the Federal Reserve on June 12, 2024 in Washington, DC (photo of Kevin Dietsch / Getty Images)
Images Kevin Dietsch / Getty
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tilting legend
Images Kevin Dietsch / Getty
Recently, when President Trump threatened The president of the federal reserve, Jerome Powell, the financial markets expressed. Then Trump insisted He was not going to shoot Powell, but he nevertheless took the time to criticize Fed’s interest rate policy under the direction of Powell. The markets relax a bit.
This confrontation between the president and the American central bank has inspired Planet money To collaborate with his sister podcast The indicator to do an episode This serves as a beginning in the federal reserve. He explains why economists and investors tend to believe that an independent central bank – without presidential interference – is crucial for a stable and low inflation economy. And that reviews the history of Trump’s antagonistic relationship with the Fed under Powell, a man that Trump appointed to lead the American central bank in the first place.
As the episode explains, the Fed is supposed to be isolated from partisan policy. But a new study shows how partisan policy has long influenced the faith of the Americans in the Fed. And it is not as simple as the members of a political party trusting the Fed, and members of the other party who are wary. The American faith in the FED looks more like a pendulum that swings with the presidential elections: people have tended to trust the FED when the leader of their party is seated in the White House. However, this study reveals that after this last presidential election, the pendulum did not oscillate.
The old swing pendulum
In the studyEconomists Carola Binder (at the University of Texas in Austin), Cody Couture (in Hamilton College) and Abhiprère Smit (at William & Mary), look at the partisan opinions of the Federal Reserve. They analyze first the survey data of the Gallup survey and the Michigan survey of consumers between 2001 and 2023.
Economists find a clear scheme in these historic data: a huge predictor of the question of whether the respondents said they had trusted the Fed was whether their political party controlled the White House.
For example, if an respondent was a democratic, he was more likely to express his confidence in the federal reserve when President Obama was in office. If an respondent was republican, he was more likely to express his confidence in the Fed when President Bush was in office (the self -employed, on the other hand, were always the most suspicious of the Fed, that the Democrat or the Republican is in office). It is a factor, according to economists, which is “much larger than all demographic differences”.
It’s a little weird because the White House does not call the gunshots at the Fed. The central bank has long been independent of political branches of its daily decision -making.
Above all, this phenomenon of Americans expressing confidence in the Fed when their political party controlled the White House was also true during the first term of President Trump (even if, from 2019, President Trump began to denigrate Jerome Powell and the Fed interest rate policies). The Republicans tended to have higher confidence in the Fed than the Democrats, during his first mandate.
Economists wanted to see if something had changed during President Trump’s second term. Would this model repeat itself? The Republicans were definitively wary of the Fed more than the Democrats during the mandate of President Biden. , As they had done in the past, would begin to trust the Fed more than the Democrats now that a republican controlled the White House?
This time, the pendulum was not swinging
To answer this question and more, economists conducted an online survey in early 2025 of more than 3,000 Americans. They did this investigation in two waves, shortly before, then shortly after the inauguration of Trump.
The economists’ survey suggests that, in fact, this time is different. The Republicans expressed lower Confidence in the Fed that Democrats (and the self -employed are in the middle, between Democrats and Republicans, in how much they trust the Fed).
Economists offer some potential explanations. The first is that the explosion of inflation that started in 2021 “caused a persistent erosion of the credibility of the Fed among the Republicans”. Another explanation: the Republicans have become “more skeptical about technocracy” – or, deep state experts, if you want – “no matter who controls the presidency”. Perhaps a simpler explanation is that with Trump who publicly denigrated Powell and the Fed in the media, his supporters now consider the Fed, under Powell, as the antagonist of their political tribe.
Binder, Couture and Smit have another somewhat strange observation: despite the Republicans expressing less confidence in the Federal Reserve, they were also much more likely to believe that inflation will be lower in the future. It’s weird because the biggest work in the federal reserve is to manage inflation. So many republican respondents were like, no, we do not trust the Fed. But also, inflation will drop considerably.
The economists’ survey offered responding spaces to write why they believed what they believed. And – despite the potential inflationary impact of Trump prices and the repression of immigration – Republican respondents often gave answers that suggested that they thought Trump alone would reduce inflation by business deregulation or greater energy production.
Democrats, on the other hand, expressed the highest confidence in the Fed. However, they were more likely to express fears about inflation. Many of them tended to quote prices as a reason they thought that inflation would get worse. Many others have just said basically, because you know, Trump.
Some of the conclusions of these economists can be a bit confusing for those who look closely at the Fed. But maybe it becomes less confusing when you realize: many Americans don’t really understand what Fed or what it does! They probably take their bearings from the leader of their political tribe. And, for the first time in decades, the president sent a strong signal that the Fed does not do what he wants.