Trump’s efforts to control the Fed may jeopardize new chair’s confirmation
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Hey there, it's the NPR Politics Podcast for Monday, February 2nd, 2026. I'm Tamara Keith. I cover the White House.
I'm Frank Ordonez. I also cover the White House.
And NPR's chief economics correspondent, Scott Horsley, is also here. Welcome back, Scott.
Great to be with y'all.
Yeah, and we are recording this podcast at 1.04 p.m. Eastern Time. Today on the show, President Trump has named his choice to replace Jerome Powell as chair of the Federal Reserve. What do you need to know about his pick, Kevin Warsh, and what stands between him and Senate confirmation? But Scott, before we get into Warsh, Let's do a little Federal Reserve 101, if you will. Remind us what the Fed actually does.
Yeah, the Federal Reserve was set up by Congress more than a century ago after a series of bank panics. It was set up to sort of be the lender of last resort. It has some regulatory functions overseeing banks in the country. But the thing that most people know the Fed for is that it adjusts interest rates either up or down in an effort to promote maximum employment and stable prices. That is, it's trying to fight unemployment and inflation. The Federal Reserve raises interest rates when they get nervous that inflation is too high. They tend to lower interest rates when they're worried that unemployment is rising, and it's a way to goose the economy. And in setting up this institution, Congress deliberately created the Fed to be independent of political pressure from the White House.
And we've used the phrase independence a lot in the last year.
What is the significance of Trump's nomination of Kevin Warsh for the Fed?
But can you just explain why it's important for the Federal Reserve to be insulated from politics?
Right. So in general, elected politicians would prefer to have interest rates low to kind of goose the economy before the next election and have people feeling good about where things are and make it cheaper for people, families and businesses to borrow money. But that can have long-term adverse consequences. It can lead to more inflation in the long run. So sometimes the Fed, in doing what's in the long-term interest of the economy, has to make decisions that are unpopular in the short term, like keeping interest rates high to counteract inflation. And so experience not only in this country but around the world has shown that it's best to put a little bit of distance between elected politicians who always want to do what's best in the short run or who usually want to do what's best in the short run so that the Fed can make decisions that are best in the best interest of the economy in the long run.
And we talk about that as Fed independence. It doesn't mean that they're completely untethered to the political system. The Fed has to answer to Congress. The Fed chairman goes before congressional committees twice a year and has to issue reports and so forth. But they're not supposed to basically take instructions from the White House.
So, Franco, President Trump has been very vocal about his desire for the Fed to lower interest rates. He doesn't seem to be all that into the idea of Federal Reserve independence. Can you just like take us through the last year of Trump-Fed relations?
What does the Federal Reserve do and why is its independence important?
Yeah, I think if Trump had his way, Powell would definitely be taking instructions from Trump. And Powell's obviously not been doing that. And because of that, their relationship has been not good, very not good. I mean, it's been a really tough year. I mean, Trump has just been relentless in trying to pressure Powell to lower interest rates. And he's calling him names like Too Late Powell. He's calling him a moron for what Trump claims are keeping the rates, quote, artificially high. Trump's called for his resignation. And more recently, it's not just rhetoric from Trump. Trump's DOJ has now, you know, kind of launched a criminal investigation into Powell, which many, many critics see as another effort to pressure Powell to lower the rates.
And Trump has gone after members of the Federal Reserve's board of governors like Lisa Cook, you know, in an effort to replace her with more friendly governors, which is another example of how Trump is trying to put pressure on the Fed to lower interest rates.
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