What Trump’s Win Means for Fed Independence

Donald J. Trump spent his first presidency on a collision course with America’s central bank. Will it intensify?

Donald J. Trump spent his first presidency attacking the Federal Reserve, pushing policymakers to cut interest rates and calling Fed officials names that ranged from “boneheads” to “enemy.”

That rhetoric is likely to make a return to the White House with Mr. Trump. The Republican has been promising that interest rates will come down on his watch — even though rates are set by the politically independent Fed and the president has no direct control over them.

The question looming over markets and the Fed itself is whether Mr. Trump will do more than just talk this time as he tries to get his way. The Fed is in the process of cutting rates, but it is unclear whether it will do so fast enough to please Mr. Trump.

Congress granted the Fed independence from the White House so that central bankers would have the freedom to make policy decisions that brought near-term pain but long-term benefits. Higher rates are unpopular with consumers and with incumbent politicians, for instance, though they can leave the economy on a more sustainable path over time.

But some in Wall Street and in political circles worry that the Fed’s insulation from politics could come under pressure in the years ahead. Here's what that might look like.

Mr. Trump first elevated Jerome H. Powell, the Fed chair, to his current role in early 2018. He then quickly soured on Mr. Powell, who resisted his calls to sharply lower interest rates.