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Since Donald Trump’s return to the White House, he has relentlessly attacked the US Federal Reserve’s independence. In his pursuit—so far fruitless—of considerably lower interest rates, Trump has sought to intimidate and fire Fed officials and pack the central bank with loyalists.
Most remarkably, Trump has turned the Fed’s leadership succession into a political football. As part of the administration’s bid to jettison outgoing Fed Chair Jerome Powell, the US Department of Justice opened a baseless criminal investigation into Powell, which it closed only to ensure the confirmation of his successor, Kevin Warsh.
Such outright hostility toward the Fed may seem like a personal vendetta or an American oddity. But it is neither. Rather, Trump’s campaign underscores the erosion of conservative support for independent central banks worldwide.
Central bankers became conservative heroes in the 1980s, when Paul Volcker was Fed Chair. Volcker was a Democrat, but he tamed runaway inflation with a series of aggressive rate hikes. Together with his calls to cut the federal deficit, Volcker’s conquest of monetary stability endeared him to conservatives. Building on Volcker’s legacy, his successor, Alan Greenspan, preached market liberalization to promote economic growth and contain inflationary pressures.
The establishment of the European Central Bank in 1998 marked the triumph of independent and inflation-focused central banks. With the support of many politicians and economists (including liberals as well as staunch conservatives), these institutions gained more prominence. Backed by financial markets, informal alliances supporting low inflation and neoliberal policies then became entrenched in international policy circles. At the turn of the 21st century, critics of independent central banks and their priorities were found almost exclusively on the left.
All that changed after the global financial crisis of 2008—well before Trump became president. To avert economic collapse and deflation, the Fed under Ben Bernanke rescued Wall Street, cut interest rates to zero, and launched massive purchases of financial assets, known as quantitative easing. Other central banks around the world adopted similar unconventional policies, although their timing and scale differed.
This gave rise to a new breed of critics on the right. In the United States, Tea Party activists and politicians accused Bernanke of leading America to ruin. They complained that the Fed should fight inflation and fiscal deficits, not bail out banks or facilitate credit easing. Some conservative monetary policymakers, economists, and financiers also turned against the Fed’s huge stimulus. These establishment critics notably included Warsh, the incoming Fed chair, and Scott Bessent, now Trump’s treasury secretary. In their view, the Fed was encroaching on fiscal policy and distorting financial markets.
These criticisms fueled the radicalized conservative movement that elevated Trump to the presidency in 2016. MAGA Republicans share a hatred of the “deep state” and a distrust of independent government agencies, including the Fed. Trump has seemed to expect his Fed nominees to slash interest rates when he was in power, and to raise them when he was not. Trump soured on Powell, his pick for Fed chair in 2017, for not following that script.
European conservatives have also become more critical of central banks, as they have competed with increasingly popular far-right parties in recent years. Germany’s far-right party Alternative für Deutschland was founded by conservatives who opposed the euro and demanded austerity in Greece and other European Union countries. The United Kingdom Independence Party and its successor, Reform UK, successfully advocated an exit from the EU and railed against the Bank of England.
To be sure, conservative supporters of independent central banks have not disappeared. In the US, some conservative Supreme Court justices and congressional Republicans resisted Trump’s assaults on Powell and the independent Fed. Likewise, many moderate conservatives in Europe have defended central bankers against attacks from the far right. But amid increased polarization, the process of appointing monetary policymakers is set to become more confrontational.
Warsh, for his part, has vowed to defend the Fed’s independence. But the question is whether he can do that without antagonizing Trump, who sees low interest rates as critical to boosting the economy and addressing affordability concerns before November’s midterm elections—never mind the inflationary pressures caused by his tariffs and war against Iran. If Warsh’s Fed does not lower rates, and fast, Trump’s attacks are unlikely to cease.
The broader problem is that central bankers can no longer count on a deep well of conservative support for their independence and technocratic policymaking. In the US, Trump and his MAGA movement have made the Fed into a scapegoat, portraying it as biased against the administration’s agenda. In Europe, many conservatives have rebuffed central banks’ cautious efforts to address broad sources of instability, such as climate change, arguing that they should stick to their narrow mandate of ensuring price stability.
Even if the Fed and other central banks manage to preserve their institutional integrity, central bankers will not find it easy to repair relations with an increasingly radicalized right without acquiescing to its partisan demands. If monetary policymakers are to remain credible and independent, they will need both individual courage and reliable defenders.
