Trump again criticizes the Federal Reserve, what signal does this send? "New Federal Reserve News Agency": This time is different from eight years ago

Trump has once again "opened fire" on the Federal Reserve. Nick Timiraos, a senior reporter known as the "new Federal Reserve correspondent," believes that while Trump's criticism always focuses on the Fed's management of inflation and interest rates, this time the economic environment he faces when calling for lower interest rates is vastly different from that of eight years ago during his first presidential term. Economically, there is pressure from rising prices, and politically, it remains to be seen whether Trump can influence the Fed's independence through Congress.

On Wednesday, January 29th, Eastern Time, just an hour after Powell concluded the Federal Reserve's monetary policy meeting press conference, Trump posted on his social media criticizing the Fed for failing to address America's "worst" inflation problem in history, directly naming Fed Chairman Powell. He wrote:

"Because Powell and the Federal Reserve failed to stop the inflation problem they created, I will do this by unleashing American energy production, cutting regulations, rebalancing international trade, and revitalizing American manufacturing. But what I want to do goes far beyond stopping inflation; I will make our country strong again economically and in other ways! The Fed's bank regulation has been terrible. The Treasury will lead the way in cutting unnecessary regulations and will lend to all American people and businesses. If the Fed spent less time on DEI (Diversity, Equity, and Inclusion), gender ideology, 'green' energy, and false climate change, inflation would not be a problem. Instead, we are suffering from the worst inflation in our nation's history!"

Timiraos believes that there are significant political and economic differences between the White House and the Federal Reserve at present, and any future conflicts over interest rate settings may be influenced by these differences. He summarizes the main differences compared to Trump's first term as follows:

• Politics: Trump has stronger control over the Republican Party in this term. Whether Congress will defend or undermine the Fed's independence is crucially dependent on Senate Republicans, as they are responsible for approving Fed board nominees. During Trump's first term, these Republicans largely united in support of Powell, but now, a group of institutionalists like Mitt Romney has retired, and it remains unclear how Republican senators will defend the Fed's independence.
• Economy: Specifically, changes in economic outlook. The current inflation situation is not as dangerous as it was before the Fed began its rate hike cycle, when Powell started serving as Fed Chairman seven years ago. Because price setters are now more aware of the risks of high inflation and realize that if the economic strength can withstand inflation, they can pass on higher prices, Fed officials may be more concerned that if they let their guard down, they will lose credibility in fighting inflation.

Wall Street Journal mentioned that the day before the Fed announced a pause in rate cuts this Wednesday, Timiraos warned that tariffs are an important uncertainty affecting the Fed's future actions This Thursday, he mentioned again that this could also be a trigger for conflict between the Federal Reserve and the White House, as tariffs complicate the inflation outlook.

Citigroup's chief economist Nathan Sheets believes that Trump has not been as aggressive on tariffs as many feared, due to the current economic environment.

Finally, Timiraos pointed out that without evidence of continued declining inflation, it cannot be guaranteed that a Fed rate cut will lower long-term rates. In other words, bullying the Fed is one thing, but bullying the bond market is entirely another. He quoted Tom Graff, chief investment officer of investment advisory firm Facet, saying that Trump's economic advisors should know that too much rate cutting now could lead to rising inflation, “if the market believes the Fed's rate cuts are wrong,” long-term yields could rise.

In summary, as Peter Conti-Brown, a Federal Reserve historian at the University of Pennsylvania, said, what Trump “said to the Fed doesn’t matter; what he did matters.”

Peter Conti-Brown believes that regardless of what conflicts may arise between the White House and the Fed in the future, the key will ultimately be whether the Trump administration will take measures to exert greater influence over the Fed's rate decisions, such as appointing Powell's successor next year. The new U.S. Treasury Secretary, Yellen, proposed this method of establishing a so-called shadow Fed chair last year