The Fed’s six big challenges in 2026

IN COMING MONTHS, markets will undoubtedly obsess over President Donald Trump's choice to lead the Federal Reserve and whether this will give him the control he seeks over interest rates.

- BILL DUDLEY

Yet that's not the only challenge the world's most powerful central bank will face in 2026.I see six big ones.

Independence:

Markets are right to worry. If President Trump manages to undermine faith in the Fed's commitment to containing inflation, the repercussions could be disastrous. That said, even if the next Fed chair wants to lower interest rates further in line with Trump's preferences, that outcome is far from guaranteed. The chair must also convince the policy-making Federal Open Market Committee, and risks losing credibility in the event of failure. Simultaneously retaining the confidence of the FOMC, the Fed staff, investors and the president will be a difficult task. The unsettled case of Fed Governor Lisa Cook, whom Trump has sought to fire "for cause," still matters a lot. If the Supreme Court effectively expands the president's power to remove Fed officials, including FOMC members, it will significantly enhance his ability to influence monetary-policy decisions - and potentially to stack the committee.

Interest rates: