Janet Yellen warns of 'banana republic' path as Trump attacks Fed independence

Key facts

• Janet Yellen is the first and only person to hold the 'big three' U.S. economic leadership positions.
• She was inducted into the National Women's Hall of Fame as a 2026 honoree.
• The Hall of Fame was founded in 1969 in Seneca Falls, N.Y.
• Yellen said she has 'never seen a president who has pulled out all the stops' to influence Fed personnel.
• She called the weaponization of the Justice Department against the Fed chair a 'worst attack' on independence.
• Yellen warned that deregulation in the financial sector has 'already gone too far' and will lead to a future crisis.
• She expressed concern over President Trump's treatment of allies and trade policies, saying they destroy global rules.
• Yellen described Kevin Warsh, Trump's Fed chair pick, as someone who 'cares a lot about inflation' and understands Fed independence.

A historic honor, a dire warning

Janet Yellen, the first woman to lead the Federal Reserve and the first female treasury secretary, has been named a 2026 inductee into the National Women’s Hall of Fame. The honor, she said, is 'very special' because it places her within the broader story of women’s struggle for equality in America. Yet the milestone arrives at a moment of profound anxiety for the economist who has held all three of the nation’s top economic posts. In an interview, Yellen delivered a blistering assessment of the current political landscape, warning that President Donald Trump is waging the worst assault on Federal Reserve independence in her lifetime and steering the country toward a 'banana republic' model of economic governance. 'That’s the road in a banana republic to high or even hyperinflation,' she said, referring to Trump’s explicit demand that the Fed hold down interest costs on the national debt.

The worst attacks on Fed independence in a lifetime

Yellen did not mince words when asked about the state of the central bank’s autonomy. 'We’ve seen the worst attacks on Fed independence in certainly in my lifetime,' she said. While presidents have always preferred easier monetary policy, she noted, Trump has gone further than any predecessor by attempting to stack the Federal Reserve with loyalists. 'Most recently, this means weaponizing the Department of Justice against the Fed chair. It’s meant attempting to remove a member of the Federal Reserve Board for very questionable cause,' Yellen said. She argued that the Fed’s dual mandate of price stability and full employment is being subordinated to the president’s desire to lower debt servicing costs. 'The Federal Reserve’s job is price stability and full employment, and you have a president who has very explicitly stated the Fed’s job should be to hold down the interest costs of the debt,' she added.

Global rules under assault

Beyond monetary policy, Yellen voiced alarm over Trump’s approach to trade and foreign relations. She accused the president of 'destroying a set of global rules that have enabled us to have a peaceful and prosperous many decades since World War II ended.' The system that countries largely abided by, she said, is being dismantled, with 'devastating effects on how the global economy works.' Yellen also pointed to domestic damage: the undermining of research capabilities and universities, and the tearing down of the civil service. 'He’s really destroying much of the government, tearing down the civil service, which is a store of knowledge that has been an asset for the American people,' she said.

Deregulation and the next financial crisis

Yellen, who oversaw the Fed during the aftermath of the 2008 financial crisis, warned that deregulation in the financial sector has already gone too far. 'I believe, has already gone too far and will ultimately lead to a future financial crisis, which undermines financial stability,' she said. The comment echoes her long-held view that the purpose of economics is to improve outcomes for people, especially those struggling to succeed. Reflecting on her career, Yellen said she is proudest of her role in managing the worst financial crisis since the Great Depression and helping people recover. 'I’m grateful that I was entrusted with very important roles where I helped to make decisions, certainly with others that I think did advance American economic welfare,' she said.

A difficult situation for Kevin Warsh

Asked about Kevin Warsh, Trump’s pick to lead the Fed, Yellen offered a nuanced assessment. She served with Warsh when she was president of the San Francisco Fed and later as vice chair of the Federal Reserve Board. 'He’s a person who cares a lot about inflation. It’s really one of his strongest and most consistent themes,' she said. 'I do believe he values and understands the importance of the independence of the Fed,' Yellen added. 'I think President Trump has put him in a very difficult situation.' The remark underscores the tension between Warsh’s known views and the political pressure he would face from a president who has shown little regard for central bank independence.

A legacy of firsts, a future of uncertainty

Yellen’s induction into the National Women’s Hall of Fame, founded in 1969 in Seneca Falls, N.Y., cements her place in a lineage of women who have broken barriers. She is the first and only person to hold the 'big three' U.S. economic leadership positions: Fed chair, treasury secretary, and chair of the White House Council of Economic Advisers. But the economist, who often found herself the only woman at the table in academia and international meetings, sees her story as part of a larger struggle. 'I see myself as being situated in this having benefited from what generations before did and inspired me, and hoping that my story can inspire future generations,' she said. Looking ahead, Yellen painted a grim picture for the next generation. 'We’re looking at a world in which the economy is going to operate very differently,' she said, citing the erosion of foundations that have driven poverty reduction and economic welfare. The combination of political attacks on the Fed, trade wars, deregulation, and the dismantling of government institutions, she warned, is creating a volatile mix that could define the economic landscape for years to come.

The bottom line

• Janet Yellen warns that Trump's attacks on Fed independence are unprecedented and risk hyperinflation.
• She accuses the president of destroying post-WWII global trade rules and undermining U.S. research and civil service.
• Yellen predicts that financial deregulation will lead to a future crisis, echoing her experience with the 2008 meltdown.
• She views her Hall of Fame induction as part of the broader story of women's equality in America.
• Yellen describes Kevin Warsh as inflation-focused and understanding of Fed independence, but placed in a difficult position by Trump.
• The economy is set to operate 'very differently' for the next generation, with foundations of poverty reduction being eroded.