There's bound to be conflict.
Already Trump, on the campaign trail a couple months before the election, accused Yellen of manipulating monetary policy to favor President Barack Obama and pave the way for Hillary Clinton, who nonetheless lost the election. For her part, Yellen has refused to be drawn into a public battle, rebuffing any and all efforts to get her to criticize Trump.
Where they go from here, now that the Yellen Fed has approved a rate hike in the central bank's first post-election meeting, will be something investors must watch closely.
"I'm sure that the president-elect would like to have his pro-growth agenda not be killed in the cradle by the Federal Reserve," said Ed Keon, portfolio manager and managing director at investment research firm QMA. "He's fortunate to have a chair at the Federal Reserve who shares a similar set of ideas about how the U.S. economy should perform to reach a greater percentage of people in the next couple of years."
At the root of Trump's fiscal plan is a rollback in tax rates and increased domestic infrastructure spending in the neighborhood of $1 trillion. Many evaluations of the plan figure that will tag on another $5 trillion or so to the $19.9 trillion national debt.
Whether that gaudy figure is manageable is fully dependent on the cost of debt service. In other words, low rates are going to be pivotal to make aggressive fiscal policy work.
Yellen has been unflinchingly dovish when it comes to her view on rates, though the Fed appears to be on the path back to policy that at least strives for normalization if not actual tightening.