Bank of America asserts that Trump's selection for the chairmanship won't jeopardize the Federal Reserve's autonomy, particularly if Jerome Powell opts to remain in his position.

Nonetheless, the White House has also implemented more drastic actions, including menacing to dismiss Fed chairman Jerome Powell and personally disparaging him, endeavoring to oust additional members of the Federal Open Market Committee (FOMC), and making a visit to the central bank’s main building during a dispute concerning renovation expenses.

So looking ahead, analysts are already wondering what a Trump-nominated Fed chairman will mean for the central bank’s independence. As UBS’s Paul Donovan highlighted in a note to clients earlier this week, a chairman overly sympathetic to the views of the White House may draw “parallels” with a partnership between President Nixon and Arthur Burns in the 1970s—which ended in disaster.

“Burns ultimately faced rebellion within the ranks of the Fed, and the Fed has been showing more independence of spirit in its voting patterns on policy of late, so one should be cautious of reading too much into the actions of a single individual at the Fed,” Donovan added.

This sentiment was similarly voiced by Aditya Bhave, Bank of America's senior U.S. Economist, during a media session held yesterday. When questioned by Coins2Day regarding potential threats to the Fed’s autonomy with a new chairperson, Bhave commented that the matter “almost depends more on what happens with the broader composition of the committee, rather than just the Fed chair.”

He stated: "Consequently, we're aware a new Fed chair will be appointed, and it's likely they'll occupy Steven Miran's position on the board. Therefore, in that regard, the board's inclination, simply by substituting that individual for Miran, won't significantly shift, assuming they have a similar policy leaning to Miran.

“The question then becomes, will Powell leave as a governor?”

Miran previously led Trump's Council of Economic Advisers before stepping in for Adriana Kugler on the Federal Open Market Committee after her departure earlier this year. His tenure is anticipated to be a provisional one, completing Kugler’s term which concludes next month.

Although the position of Fed chairman will become available when Powell departs in May 2026, his tenure as a Fed governor continues until January 2028, suggesting he might deviate from custom and remain with The Fed for an additional period, potentially to the displeasure of the White House.

“[Powell] has been very noncommittal about that,” added Bhave. “There’s very little historical precedent for a chair sticking around as governor. It hasn’t happened, I believe, in the last 75 years, but he hasn’t said he’s going to leave.”

Powell has consistently upheld the Federal Reserve's autonomy amidst considerable opposition from The White House. He maintained a resolute stance on that he wouldn’t leave his position if the Oval Office requested it, further stating that any such effort by an administration would be unlawful.

“Our independence is a matter of law,” he added to Bloomberg this summer. “Generally speaking, Fed independence is very widely understood and supported in Washington [and] in Congress, where it really matters. The point is we can make our decisions, and we will only make our decisions, based on our best thinking, based on our best analysis of the data, about what is the way to achieve our dual mandate goals … as to best serve the American people.”

Wider composition of the FOMC

Last month, Raphael Bostic, the president and chief executive officer of the Federal Reserve Bank of Atlanta, confirmed he would be retiring when his tenure concludes in February 2026, creating another vacancy on the FOMC which Trump could fill with a dovish economist.

Also present is also the question of Governor Lisa Cook, whom Trump attempted to remove from the committee, and whose legal challenge against that decision will be heard by The Supreme Court in January. The White House anticipates that the judicial proceedings will conclude favorably for them, offering another chance to make an appointment they prefer.

“I think those questions are much more important if you’re thinking about a wholesale shift in thinking at the Fed than just who the next chair is going to be,” Bhave added. “If you take this committee—that is so hesitant to allow Powell to even do the next 25 basis points of cuts—for our estimates, there’s about eight of the 12 regional Fed presidents who don’t want to do that cut, either very explicitly or they somewhat would prefer to not do it. If you take this committee and you put them up against a Fed chair that says, ‘You know what, I want to go to 2.5%,’ I just don’t think that chair can make a lot of progress in that scenario.”