Trumponomics Ex-New York Fed President Bill Dudley on Trump and Central Bank Independence
Oct 20, 2025
Bill Dudley, former president of the Federal Reserve Bank of New York and Bloomberg Opinion columnist, shares insider insights on central banking. He discusses the Fed's tightrope act of managing sticky inflation while facing labor market challenges. Dudley highlights the looming threats to Fed independence due to political pressures, particularly from Donald Trump. He elaborates on how AI and tariffs may impact inflation forecasts and warns against the consequences of a politicized central bank on future economic stability.
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Fed Faces A Two‑Way Risk Trade‑Off
- Bill Dudley warns Fed faces a trade-off between sticky inflation and a weakening labor market.
- He argues inflation risks (tariffs, AI-driven electricity demand) are as important as downside labor risks.
Risk Of Unanchored Inflation Expectations
- Dudley cautions that prolonged inflation above 2% could unanchor expectations and make future disinflation harder.
- He prefers patience rather than rapid easing amid high uncertainty.
Tariff Effects Likely Delayed, Not Avoided
- Dudley expects tariff pass‑through to be delayed but largely realized, estimating about 80% pass‑through.
- He believes tariffs could add roughly 1–1.5% to price levels into mid‑2026.