While Federal Reserve officials have always touted decision-making and politics as 'insulated,' for Federal Reserve Chairman Powell, Trump's election means new troubles. Because Trump has previously liked to 'point fingers' at the Fed, believing that the president has the right to speak on this issue, Trump's promised policies during the campaign may disrupt the economic prospects of the United States and change the Fed's policy considerations in the coming months.

Trump has promised to take more aggressive tariff measures against U.S. trading partners, expel millions of illegal immigrants, and extend the tax cuts of 2017. In October of this year, 23 Nobel laureates in economics, including two winners from this year, released a joint letter in support of Harris. The main reason they oppose Trump's election is that Trump's advocacy of external tariffs and domestic tax cuts will lead to price increases, expanding government deficits, and exacerbating domestic inequalities.

Derek Tang of LH Meyer/Monetary Policy Analytics believes that decision-makers who have not yet made a decision will be more cautious in determining when and by how much to cut interest rates because they need to evaluate how Trump's economic plans will unfold. Tang said:

"From a marginal perspective, they (Federal Reserve policymakers) may believe that in the next few years, reducing tariffs or immigration may bring higher inflation risks. Their mindset may be, 'By slightly slowing down the rate of rate cuts, we can have more time to observe inflation expectations and the actual situation of the labor market.'"

Analysts at Bank of America Merrill Lynch reported on Tuesday that if Trump takes office and implements fiscal expansion, the Federal Reserve may raise its neutral rate expectations. In addition, if Trump significantly imposes tariffs, the Fed may pause rate cuts due to considerations of the impact on inflation and economic growth.

Reporter Nick Timiraos, known as the 'New Federal Reserve Associated Press,' wrote after Trump's victory that Trump's election will not currently affect the Fed's stance on monetary policy unless the Fed fully understands Trump's specific measures in domestic taxes, tariffs, and immigration policies. If the Republican Party wins control of both houses of Congress, the Fed may 'begin to modify some basic assumptions' at the December meeting of this year.

Trump's public criticism may raise doubts about the independence of the Federal Reserve.

In August of this year, Trump once said that the President of the United States should have a certain degree of say in interest rates and monetary policy, criticizing the Fed's rate adjustments as 'either a bit too early or a bit too late,' and then suggesting that the Fed's 50 basis point rate cut in September was for political reasons. In October, he again said that he believed he should not order the Fed to do anything, but had the right to comment on the direction of interest rates.

Bloomberg reports that Trump's policies have made the Federal Reserve's future work more complex because the Fed seeks to lower the inflation rate to 2%, while also considering the labor market. When the Fed is already in a delicate situation trying to achieve its targets, if Trump openly attacks Powell as before, the Fed may be under unsettling political scrutiny.

Trump's series of remarks have led observers to speculate that he may try to limit the independence of the Federal Reserve after taking office. The report mentioned that legal scholars pointed out that Trump had considered firing Powell during his first presidential term, which would trigger unprecedented legal controversies.

Sarah Binder, a political science professor at George Washington University, believes that public criticism of the Federal Reserve by the President may raise external doubts. The Federal Reserve is structurally independent, but 'if people begin to doubt whether the Fed will do as it says, then any degree of structural insulation cannot protect it.'

Former Trump Chief Economic Advisor Hassett may become the next Chairman of the Federal Reserve.

Kevin Hassett, former Chairman of the White House Council of Economic Advisers during Trump's presidency, expressed that doubts about coordination between the Federal Reserve and the government should be taken seriously. 'The next administration should choose a neutral leadership of the Federal Reserve.'

Wall Street News has mentioned that even as President of the United States, Trump has limited ways to control the Federal Reserve. The President has the right to nominate a candidate for Chairman of the Federal Reserve, but the final decision rests with the Senate, and the Constitution grants the Federal Reserve a high level of independence, preventing the President from dismissing the Chairman solely due to policy disagreements. If the President insists on dismissal, a clear court ruling may also be required.

The President can also influence monetary policy in the coming years by nominating seven members of the Federal Reserve Board. This is also the most direct way that Trump can affect the Federal Reserve in the future. These nominations also require Senate confirmation, and the process of replacing members is deliberately designed to be slow.

Federal Reserve Chairman Jerome Powell's term will end in May 2026, and his board position will expire in January 2028. Federal Reserve Board member Adriana Kugler's term will end in January 2026. Trump will have the opportunity to appoint candidates to these positions in the next four years.

Bloomberg reported that multiple sources close to Trump's campaign team said Hassett may be the nominee Trump ultimately chooses for the next Federal Reserve Chairman.

In addition, Federal Reserve Vice Chairman responsible for financial industry regulation, Barl's term will end in July 2026. Barl's initial proposal for new banking regulations required banks to increase capital by 16%, which was criticized by the banking industry and Republicans.

JPMorgan's Chief U.S. Economist Michael Feroli pointed out in a research report in October that if Barl resigns quickly after the appointment of a president from the opposing party, Trump may quickly influence regulatory policy, even if he cannot directly affect monetary policy.

Editor/Somer