Trump Treats Fed Chief as Ally, Risks Economic Independence

President Donald Trump has shifted his approach to the Federal Reserve, treating Chairman Kevin Warsh as an ally and almost a member of the Cabinet.

This change in dynamics creates economic risks, as it undermines the Fed's independence and could lead to politicized monetary policy decisions.

The White House denies that Trump is pressuring Warsh to lower interest rates, but market commentators have panned the chairman's performance at his second press conference, leading to concerns about his credibility.

Former New York Fed president Timothy Geithner warned that if inflation spikes and expectations rise, Warsh would need to demonstrate that he is willing to act, which could lead to higher interest rates and a slower economy.