Wall Street issues another warning! Citadel founder Ken Griffin: The White House must stay "further away" from the Federal Reserve

Hedge fund giant Citadel founder Ken Griffin warned that the White House must maintain "distance" from the Federal Reserve, reflecting Wall Street's latest concerns over Trump's potential appointment of a loyalist as Fed chair. This statement highlights investors' anxiety about the independence of the Federal Reserve.

According to the Financial Times, Griffin stated at an event in Paris on Tuesday, "The most important thing the president and the incoming Federal Reserve chair can do... is to create distance between the White House and the Federal Reserve," in response to a question about whether White House economic advisor Kevin Hassett should lead the Fed.

The competition for the Fed chair nomination has intensified, with current chair Jerome Powell's term set to expire in May next year. Hassett was previously seen as a strong candidate, but his chances have recently diminished as Wall Street executives worry about his lack of sufficient independence from Trump.

Griffin's warning reflects deep market concerns that monetary policy could be subject to political interference, which could significantly impact the dollar exchange rate, the bond market, and inflation expectations.

Wall Street Titans Raise Concerns Over Hassett's Independence

Hassett served in both of Trump's administrations, and while he stated that the Fed needs to set interest rate policy without political pressure, he told CNBC on Tuesday that if the president has good ideas on economic policy, he would convey them to the central bank's rate-setting committee. "The president is a senior observer of the economy," Hassett said.

JPMorgan CEO Jamie Dimon hinted last week that he believes former Fed governor Kevin Warsh would be a strong candidate. Warsh served as a communication bridge between the Fed and Wall Street during the 2008 financial crisis.

According to the Financial Times, bond investors have expressed concerns to the Treasury about Hassett's nomination. Betting markets have readjusted Hassett's odds, showing that the White House economic advisor is currently neck and neck with Warsh.

Trump Pressures for Rate Cuts, Fed Faces Political Challenges

Trump claims that both candidates would cut rates, insisting that interest rates should be lowered to 1%, despite inflation remaining above the central bank's 2% target. The Fed has cut rates three times this year, with last week's 25 basis point cut bringing the target range for the federal funds rate to a three-year low of 3.5% to 3.75%.

In the Federal Open Market Committee, only one voting member—Fed governor and Trump ally Stephen Miran—supports a 50 basis point rate cut.

Last month, Griffin attended an exclusive dinner at the White House with about a dozen Wall Street executives. He noted that Trump was very focused on business leaders' suggestions on how to address ongoing affordability issues, which have increasingly frustrated American voters.

Market Impact and Policy Outlook

Griffin declined to support any specific candidate, stating that he does not believe "throwing out" his choice "adds anything to the current debate or decision." He said, "The president wants to make a decision from the perspective of who will provide the greatest reassurance to global markets, the American investing public, and consumers, ensuring that we can manage inflation in the U.S." This hedge fund founder has traditionally been an important donor to Republican candidates, but did not explicitly support Trump in last year's election. He had previously criticized Trump's tariff policies.

Griffin pointed out that "there has been an ironic reversal," as polls show a significant improvement in the Democrats' prospects for next year's midterm elections, while the Republicans are struggling with the "inflationary" reality of many of their policies