This has been a history-filled year. We've watched the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) rally to all-time highs, and just witnessed only the 17th changing of the guard at America's foremost financial institution, the Federal Reserve.

May 15 marked the final day of Jerome Powell's second term as Fed chair and cleared the way for President Donald Trump's nominee, Kevin Warsh, to become only the 17th head of the Fed since the central bank's creation in 1913.

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As Trump's hand-picked successor to Powell, there's an expectation that the president and Warsh won't be publicly feuding in the same manner that we witnessed since early 2025 between Powell and Trump. But economic dynamics and the new Fed chair's monetary policy ideology look to have Warsh and Trump on a similar collision course, with Wall Street potentially taking the brunt of the punishment.

President Trump and now-former Fed Chair Powell had publicly feuded over interest rates over the last year. Image source: Official White House Photo by Daniel Torok.

Trump and Powell throwing each other under the bus was commonplace

Although President Trump nominated Jerome Powell during his first, non-consecutive term, disagreements between the two have frequently made headlines since Trump's second term began on Jan. 20, 2025.

The president has openly chastised Powell and other members of the Federal Open Market Committee (FOMC) for not being more aggressive in cutting interest rates. The FOMC -- the 12-person body, including the Fed chair, responsible for setting the nation's monetary policy -- reduced the federal funds target rate six times between September 2024 and December 2025.

Donald Trump has publicly called for interest rates to be slashed to 1% or lower. For context, the federal funds target rate currently sits between 3.5% and 3.75%.

Lower lending rates would likely increase hiring and spur corporate innovation. Perhaps more importantly, it would make it easier for the U.S. to service its $39 trillion in national debt.

Meanwhile, the sunset of Powell's tenure as Fed chair was marked by two consistencies. First, he regularly rebuffed Trump's calls for dramatically lower interest rates, noting that economic data, not political persuasion, would guide monetary policy decisions.

Secondly, Powell frequently pointed the proverbial finger back at President Trump for the elevated inflation that caused the FOMC to pause its rate-easing cycle. In his prepared statements following FOMC meetings, Powell often cited the stickiness of Trump's tariffs on the goods sector and the energy supply shock tied to the Iran war as reasons inflation was elevated and rate cuts weren't deemed prudent.