Financial markets recently went bankrupt when President Trump threatened to fire Fed Chairman Jerome Powell. Trump then insisted that he wouldn't fire Powell, but he still spent time criticizing Powell's interest rate policy under Powell's leadership. The market is a bit refrigerated.

This confrontation between the president and the U.S. central bank inspired Planetary Money Work with Sister Podcast Indicator Make an episode that can be used as a primer for the Fed. It explains why economists and investors tend to believe that independent central banks (without presidential intervention) are crucial to a stable low-inflation economy. This is the history of Trump's confrontational relationship with the Federal Reserve under Powell, who was first appointed as the U.S. central bank.

As the plot explains, the Fed should be isolated from partisan politics. But a new study shows how partisan politics has long influenced Americans’ belief in the Fed. It is not as simple as a member of a party who trusts the Fed and a member of the other party who doesn’t trust it. The U.S. faith in the Fed is more like a pendulum in the presidential election: people tend to trust the Fed more when their party leaders sit in the White House. However, the study found that the pendulum did not swing after the recent presidential election.

Old swing

In this study, economists Carola Binder (located at the University of Texas at Austin), Cody Couture (located at Hamilton College) and Abhiprerna Smit (located at William & Mary) looked at the Fed’s partisan views. They first analyzed data from the Gallup poll and the Michigan survey of consumers between 2001 and 2023.

Economists have found a clear pattern in this historical data: a huge predictor of whether respondents express trust in whether the Fed controls the White House.

For example, if the defendants were Democrats, they were more likely to express their trust in the Fed when President Obama took office. If the defendants were Republicans, then when President Bush took office, they were more likely to express their trust in the Fed (while, both Democrats and Republicans are on duty, often the least trusted persons in the Fed). This is a factor that is “much larger than any population difference”, economists have found.

This is a little strange because the White House is not playing at the Fed. In daily decision-making, central banks have long been independent of their political branches.

Importantly, during President Trump’s first term, Americans expressed trust in the Fed as parties controlled the White House (although President Trump began to slam Jerome Powell and the Fed’s rate of interest policies starting around 2019). During his first term, Republicans often trust the Fed more than Democrats.

Economists want to see if there is any change in President Trump’s second term. Will this pattern repeat itself? Republicans absolutely distrust the Fed more than Democrats during the presidency of President Biden. Like in the past, Republicans control the White House, will they begin to trust the Fed more than Democrats, as they did in the past?

The pendulum clock did not swing this time

To answer this question, more economists conducted an online survey of more than 3,000 Americans in early 2025. They conducted two waves of investigations shortly before and shortly after Trump’s inauguration.

Economists' survey shows that in fact, this time is different. Republicans say reduce More than the trust Democrats have in the Fed (and the independents are among the middle, between Democrats and Republicans, their trust in the Fed).

Economists provide some potential explanations. One is that the inflation explosion that began in 2021 “has caused the continued erosion of Republican credibility.” Another explanation: Republicans have become “more suspicious of technocracy” or, if you prefer, “who controls the presidency.” Perhaps a simpler explanation is that as Trump publicly slammed Powell and the Fed in the media, his supporters now see the Fed under Powell as an opposition to their political tribe.

Binders, haute couture and Smit have another weird discovery: While Republicans have less confidence in the Fed, they are also more likely to believe that inflation will drop in the future. This is strange because the Fed's biggest job is managing inflation. So many Republican respondents are like, no, we don't trust the Fed. However, inflation will drop significantly.

The survey of economists does provide space for respondents to write about why they believe in their beliefs. And, while Trump’s tariffs and immigration crackdowns may have inflationary effects, Republican respondents often give answers, suggesting they think Trump will go solo through inflation, such as commercial deregulation or greater energy production.

Meanwhile, Democrats expressed their highest belief in the Fed. However, they are more likely to express fear of inflation. Many of them tend to see tariffs as the reason why they think inflation will get worse. Many others basically just say, because you know, Trump.

Some of these economists’ findings may confuse those who watch the Fed closely. But when you realize it, it may become less confused: many Americans don’t really understand what the Fed is or what it does! They may just draw clues from leaders of political tribes. And, for decades, the president has been sending a strong signal that the Fed is not doing what he wants.