President Donald Trump has again threatened to oust Federal Reserve Chair Jerome Powell, putting at risk a keystone of good economic policy and inflation management: central bank independence.

The president said on April 15, 2026, that he would fire Powell if the Fed chair stayed on in that role after his term officially ends on May 15. Powell has said he intends to remain at the helm after that if his replacement has not yet been confirmed by the Senate. Legally, Powell is allowed to do this.

Trump has promised to fire Powell a number of times, and his Department of Justice has launched a criminal investigation into renovations at the Fed building. Trump has also tried to oust another Fed governor, Lisa Cook, over allegations of mortgage fraud. In an unprecedented video response to the investigation, Powell called it and other actions “pretexts” for Trump’s ultimate goal of getting the Fed to lower interest rates.

While Trump’s actions are seen as particularly aggressive, as political economists, we are not surprised to see politicians try to exert influence on central banks. For one thing, central banks remain part of the government bureaucracy, and independence granted to them can always be reversed – either by changing laws or backtracking on established practices.

An economic power struggle

At the heart of threats to Powell and Cook – and other moves to undermine the Fed by the Trump administration – is a power struggle.

Central banks, which are public institutions that manage a country’s currency and its monetary policy, have an extraordinary amount of power. By controlling the flow of money and credit in a country, they can affect economic growth, inflation, employment and financial stability.

These are powers that many politicians would like to control or at least manipulate. That’s because monetary policy can provide governments with economic boosts at key times, such as around elections or during periods of falling popularity.

The problem is that short-lived, politically motivated moves may be detrimental to the long-term economic well-being of a nation. They may, in other words, saddle the economy with problems further down the line.

That is why central banks across the globe tend to receive significant leeway to set interest rates independently and free from the electoral wishes of politicians.

In fact, monetary policymaking that is data-driven and technocratic, rather than politically motivated, has been seen as the gold standard of governance of........

© The Conversation