LEXINGTON, Ky. — President Donald Trump's escalating threats to fire Federal Reserve Chair Jerome Powell and his continued campaign against the central bank's independence are putting at risk a cornerstone of economic policy that has helped control inflation, according to political economists and financial experts who warn of potential long-term economic damage. The Kentucky Lantern reported on the political and economic implications of the administration's assault on Fed autonomy.

Trump said on April 15 that he would fire Powell if the Fed chair remained in his position after his term expires May 15, despite Powell's assertion that he intends to stay on if his replacement has not been confirmed by the Senate. Powell's legal team argues he has the right to do so. The threat represents the latest in a series of attempts by Trump to remove Powell, whom Trump himself appointed as Fed chair in 2017.

The administration's pressure campaign extends beyond Powell. The Department of Justice has launched a criminal investigation into renovations at the Fed's headquarters, which a federal judge ruled was motivated by politics rather than legitimate concerns. Trump has also attempted to oust Fed Governor Lisa Cook over unproven allegations of mortgage fraud, a case now before the Supreme Court. In January, Cook's legal team argued that the attempt to fire her would "shatter" the Fed's independence, and the Supreme Court appeared likely to reject Trump's effort.

The moves threaten to politicize monetary policy in ways unseen since the 1970s, when President Richard Nixon pressured Fed Chair Arthur Burns to keep interest rates artificially low ahead of the 1972 election, ultimately contributing to runaway inflation that reached 15% by 1980. Economists warn that a loss of Fed independence could lead to the same outcome today. "The assault on the Fed's independence can only mean higher rates, greater volatility, and uncertainty for consumers in the years ahead," said Brett House, economics professor at Columbia Business School.

Trump's motivation is clear: he wants the Fed to cut interest rates to stimulate the economy, a policy goal that directly conflicts with the Fed's mandate to maintain price stability. Powell has called Trump's various attacks and the criminal investigation "pretexts" designed to pressure the Fed into adopting the administration's preferred interest rate policy. Financial markets have responded with alarm, with stock futures declining sharply when news of Powell's criminal investigation became public in January.

Meanwhile, the confirmation of Trump's nominee to replace Powell, Kevin Warsh, faces delays because Republican Sen. Thom Tillis of North Carolina said he will not vote for any Fed nominees until the Justice Department's investigation into Powell is resolved—creating a paradox in which Trump's own actions are keeping Powell in power longer.