As Trump Steps up Fed Attacks, Chicago Finance Execs Weigh In

With the U.S. Federal Reserve expected to make its first interest rate cut of the year this week, Chicago finance executives are voicing confidence in Chairman Jerome Powell in the face of fresh attacks from President Donald Trump on the independence of the central bank.

“I think people feel like Chairman Powell is an honest broker and this number is legitimate,” John Rogers, founder, chairman and co-chief executive officer of Ariel Investments, told Crain’s in an interview on the expected rate cuts.

Analysts are expecting a reduction of 25 basis points in the federal funds rate during the meeting beginning Tuesday, as economic growth and the job market edge ahead of inflation as the top concern.

A year ago, the bank cut rates by 50 basis points, its first cut in 4-1/2 years. Another two cuts of 25 basis points each followed by the end of 2024, but the central bank has kept its powder dry since then amid persistent worries about inflation.

The inactivity has sparked the ire of Trump, who has been publicly lobbying for sharp rate cuts from the Fed since his 2024 election in a bid to spur economic activity. He has recently stepped up attacks on Powell, calling him “stupid” and taking a hard hat inspection of the central bank’s headquarters in Washington D.C. to assure ongoing renovations there were not running over budget.

Fed autonomy is a key component of U.S. leadership in the global economy, Theodore Koenig, chairman and chief executive officer of Chicago-based Monroe Capital, told Crain’s. 

“The U.S. dollar’s standing as the world’s reserve currency rests on Fed independence—a critical anchor for global market confidence,” Koenig said in an email.

Wall Street executives have been increasingly willing to speak out against the president’s pressure tactics, including former Chicagoan and Citadel chief Ken Griffin. In a recent Wall Street Journal op-ed, he and University of Chicago professor Anil Kashyap said Trump’s criticisms of the Fed and his pressure to cut rates further weaken confidence in U.S. institutions, exacerbating the president’s recent firing of the head of the Bureau of Labor Statistics after a bearish employment report.

“Independence isn’t a permanent entitlement; it must be earned and maintained through transparency, accountability and performance,” they wrote in the Sept. 7 op-ed. “But there is a clear process for accountability. Congress has a duty to oversee the Fed, and this oversight must be free of undue interference from the executive branch.”

Top banking CEOs, including Jamie Dimon of JPMorgan Chase, David Solomon of Goldman Sachs, Brian Moynihan of Bank of America, and Jane Fraser of Citigroup, also have recently weighed in on the importance of Fed independence.

Despite the rising pressure, Powell’s repeated decisions to hold rates steady since Trump took office demonstrate the Fed has maintained its independence and the market can trust any decision is based on its reading of the economy and not the president’s social media accounts, executives told Crain’s.

Beyond berating Powell, Trump has sought to remove Biden appointee Lisa Cook from the Fed’s board of governors ahead of this week’s meeting. Trump’s efforts to oust Cook, who his Justice Department accused of mortgage fraud, have so far been thwarted in court but the administration has appealed a recent ruling blocking the firing.  

But Trump’s subsequent nomination of White House economic advisor Stephen Miran, who he hopes to seat before the start of the Fed meeting on Tuesday, to become a governor demonstrate the ongoing threat to the central bank’s independence.

“I do think, and I have my fingers crossed, but I do feel that the Supreme Court will signal that from a Constitutional perspective, the Fed will stand up as an independent agency and will not allow Trump to replace people willy-nilly and then take away the credibility of the Fed,” Rogers said.

The ongoing noise on the political front means the Fed has to move deliberately to show its decisions are based solely upon economic signals, likely ruling out the possibility of a 50-basis point cut some market watchers have said could otherwise be appropriate, said Robert Meyers, president of Republic Business Credit, a commercial finance company.

“I strongly believe for independence reasons the Fed will not consider that, as it could also be viewed as panic,” said Meyers, who also is currently serving as president of industry trade organization SFNet. “The recent jobs revision of nearly 1 million less jobs through March of 2025 indicates we have more negative news likely coming through the system, though a bit delayed. More rate cuts will follow, but it will need to be orderly and appear to be planned in line with Fed independence or people might believe the line has blurred too much.”

Inflation data has been mixed lately, providing more reason for the Fed to proceed in a slow and steady fashion, said Richard Price, executive chairman and CEO at Chicago-based Mesirow.

“We see near-term rate cuts as a positive stimulant and a sign that the Fed is viewing the weak labor market with concern,” Price said in an email to Crain's. “We believe that a reduction in rates is appropriate at this time, and that the Fed is rightly acting with high levels of caution and intent.”

Charlie Bobrinskoy, vice chairman and head of investment group at Ariel, agreed with the overall consensus that it was the right time for a cut and noted that Powell’s caution this year has given the Fed chief further credibility with the market.

“Chairman Powell has a well-earned reputation of trying to maintain the independence of the Fed,” Bobrinskoy added. “That is very important to him. He does not want his legacy to be that he caved to political pressure.”

Although Trump has taken his dispute with Powell to new levels, political pressure from the White House is a longtime Washington tradition as every president values job growth and an active economy, said Dean Lyulkin, president and co-chief executive officer of business financing firm Cardiff.

“We look at history and we see that there is a long, long history of tenuous relationships between Fed chairmen and presidents,” Lyulkin  added. “Go back to Johnson, Nixon, Reagan, all of them had what would call beef with their respective Fed chair.”