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Pimco has warned that any effort to undermine the Federal Reserve’s independence could have negative consequences for the markets, just before Donald Trump’s visit to the central bank’s headquarters in Washington.

“Markets appreciate the independence of central banks, particularly in the context of setting policy rates,” stated Dan Ivascyn, who is the chief investment officer at Pimco, a fund manager primarily focused on bonds worth $2.1 trillion, in an interview with the Financial Times on Thursday.

“Although there’s always tension between policymakers, any attempt to reduce independence would be very bad for markets.”

Trump and his team are planning to undertake the unusual action of visiting the Federal Reserve as part of an inquiry into the $2.5 billion refurbishment of its headquarters. High-ranking administration officials have criticized Fed chair Jay Powell for what they describe as “grossly” mishandling the project.

Budget director Russell Vought and Bill Pulte, head of the Federal Housing Finance Agency — who are among the Trump administration’s most vocal opponents of Powell — are set to join the president on the visit.

Presidential delegations to the US central bank, which was granted independence to set interest rates as it sees fit in 1951, are rare. The Supreme Court has signalled that the White House cannot fire Powell or any of the Fed’s other six governors over disputes over monetary policy. 

The president has lashed out repeatedly at the Fed and Powell, who he has called a “numbskull”, for declining to reduce interest rates this year. Trump on Wednesday insisted the cental bank should slash borrowing costs to about 1 per cent — a level typically associated with economic crises — from the current range of 4.25 to 4.5 per cent.

Trump ignited a steep drop in the dollar last week when he asked lawmakers whether he should fire Powell. He later said he did not plan on making such a move, but investors said even asking the question had inflamed concerns over central bank independence.

Some Fed insiders and former central bank officials are concerned the attacks are being used by the administration as a pretext to pile pressure on Powell to quit before his term as chair ends in May 2026, or even fire him “for cause” — a term usually interpreted as malfeasance. 

The Fed chair is adamant that he will remain in place and believes Trump does not have the legal grounds to dismiss him. 

“Ideas of Powell needing to step down in order to preserve independence don’t make a lot of sense to us,” Ivascyn said. “We think a good independent Fed chair would finish the term, and then determine what to do next.”

“From a bond market perspective, it’s important to continue to see positive signals that he can finish his term,” he added.