Will Trump fire the Fed?

Nearly every Cabinet or staff appointment announced by US President-elect Donald Trump has been met with a predictable wave of media outrage.

- KENNETH ROGOFF

Nearly every Cabinet or staff appointment announced by US President-elect Donald Trump has been met with a predictable wave of media outrage. Some of this hysteria can be attributed to deep-seated partisan biases, some reflects legitimate concerns, and some is pure nonsense.

When it comes to the US economy, however, the spotlight is on whom Mr. Trump might try to dismiss rather than whom he plans to appoint. Although Mr. Trump has said he will not seek to remove Federal Reserve Chair Jerome Powell—whose term ends in May 2026—there is little doubt that Mr. Trump would love to tell Mr. Powell, "You're fired."

Mr. Trump's antagonism towards Mr. Powell is baffling, given that Mr. Powell has been doing an excellent job. Though less visually thrilling than a SpaceX booster landing, the Fed's success in achieving a soft economic landing amid aggressive interest-rate hikes is no less spectacular. Such a delicate balancing act has been pulled off only once before, in the 1990s, when monetary "maestro" Alan Greenspan headed the Fed. Given that sharp increases in interest rates typically trigger recessions, economists often consider it a success when the resulting downturn is mild or at least brief.