Vice President JD Vance accused the Federal Reserve of being “asleep at the wheel,” aligning with Donald Trump in sharp criticism of the central bank. His remarks intensify the debate over Fed independence amid mixed signals from the economy.
Push for rate cuts gains steam
In a direct post on X (formerly Twitter), Vance wrote:
“Fed has been totally asleep at the wheel. As President Trump says, they’re TOO LATE, both in fighting inflation during Biden and in lowering rates now.”
The criticism mirrors Trump’s stance, framing the Fed’s current monetary policy as a drag on growth. Behind the scenes, the administration is reportedly exploring legal grounds to replace Fed Chair Jerome Powell, citing mismanagement and excessive spending on the institution’s headquarters. Economic advisor Kevin Hassett confirmed these discussions are underway.
Risks to Federal Reserve autonomy
Economists warn this offensive could jeopardize the Fed’s independence, a cornerstone of long-term inflation control. Political pressure for rapid rate cuts might unanchor expectations and reignite inflation fears, undermining credibility built over decades.
Even as consumer price indices have eased closer to targets, analysts stress the need for careful sequencing of rate reductions to prevent a new surge in prices.
Market impact and the road ahead
Financial markets are reacting cautiously but remain alert. Investors are watching not just rate decisions, but also the institutional risk of a politically pressured central bank.
Vance and Trump’s positioning signals that monetary policy will be a centerpiece of the election narrative, heightening uncertainty for the second half of the year.
Will the Fed stand firm against political pushes, or bow to demands for faster cuts? That question could prove pivotal for the dollar, Treasuries, and even Bitcoin.
