Trump Wins: How Will Yellen of the Fed React to This?

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Yellen and President-elect Donald Trump. (AFP/Getty Images)

While Janet Yellen is assured that she will not be replaced as Chair for a year and several months as Trump lacks the ability to make this change at the moment, the fact that the man is close to such gigantic power shocked the most powerful central bank of the world.

It seems that something ominous awaits the Federal Reserve. For starters, Trump is known for making a show of demonizing it, with Yellen even featured prominently in his last big advertisement prior to the day of election. In the ad, Yellen was portrayed to be part of a global elitist conspiracy of stealing from the Americans. Others considered as the ad to be anti-semitic and it will not be the first time that Yellen and Trump will be in a clash.

At the meeting back in September, Yellen was forcefully pushed back against the claim made by Trump that the decision making of the bank was being driven by the desire to help the campaign of Hillary Clinton instead of the economy of the United States. The tension made left observers wondering if the Fed chair would or should step down the moment Trump takes office. However, Yellen’s term as Chair will not be over until February 2018 and people close to her claim that she will be able to ward off the pressure of stepping down from her position.

As a Republican Senate will take over, Trump is going to fill two seats in the FOMC right away. If he happens to choose nominees with more hawkish views than the present chair, it might bring more trouble to Yellen as she tries to maintain a comprehensive consensus on the policy decisions.

The Fed and other central banks are surely making sure that their economies will be insulated from the aftershocks of Trump’s victory.

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