Powell "will undoubtedly be replaced by an ally of Trump," says Ed Yardeni

Published 03.11.2025, 09:10 Investing.com

Powell "will undoubtedly be replaced by an ally of Trump," says Ed Yardeni

Powell "will undoubtedly be replaced by an ally of Trump," says Ed Yardeni

Published 03.11.2025, 09:10

Powell "will undoubtedly be replaced by an ally of Trump," says Ed Yardeni

Investing.com - The term of Federal Reserve Chairman Jerome Powell is set to end in May 2026, and Ed Yardeni of Yardeni Research stated that he "will undoubtedly be replaced by an ally of Trump," warning that such a change could trigger an unprecedented internal conflict within the American central bank.

In a note, Yardeni praised Powell for navigating a series of "unusual challenges" as Fed chairman, including the pandemic, inflation shocks, and political pressure to cut interest rates, and remarked that he "did a very good job considering the circumstances."

However, Yardeni warned that Powell's successor under President Trump would likely push for a more flexible monetary policy and face dissent from other members of the Federal Open Market Committee (FOMC).

"If the president is defeated in voting, the resulting internal dissent would be unprecedented and seriously damaging to the credibility of the Fed," wrote Yardeni.

The note added that if a Fed chairman aligned with Trump "manages to deliver rate cuts when the incoming data does not justify them, the Bond Vigilantes could do what they did at the end of 2023, namely, push bond yields up."

For now, Yardeni believes that the Fed is operating "in the midst of a fog" during the current government shutdown, relying on private sector data to guide decisions.

He stated that Powell's most recent comments suggest that the central bank may pause rate cuts at its next meeting in December.

Investing.com - The term of Federal Reserve Chairman Jerome Powell is set to end in May 2026, and Ed Yardeni of Yardeni Research stated that he "will undoubtedly be replaced by a Trump ally," warning that such a change could trigger unprecedented internal conflict within the American central bank.

In a note, Yardeni praised Powell for navigating a series of "unusual challenges" as Fed chairman, including the pandemic, inflation shocks, and political pressure to cut interest rates, and remarked that he "did a very good job considering the circumstances."

However, Yardeni warned that Powell's successor under President Trump would likely push for a more flexible monetary policy and face dissent from other members of the Federal Open Market Committee (FOMC).

"If the president is defeated in voting, the resulting internal dissent would be unprecedented and seriously damaging to the credibility of the Fed," wrote Yardeni.

The note added that if a Fed chairman aligned with Trump "manages to deliver rate cuts when the incoming data does not justify them, the Bond Vigilantes could do what they did at the end of 2023, namely, push bond yields up."

For now, Yardeni believes that the Fed is operating "in the midst of a fog" during the current government shutdown, relying on private sector data to guide decisions.

He stated that Powell's most recent comments suggest that the central bank may pause rate cuts at its next meeting in December.