In 1951 Treasury-Federal Reserve Agreement established the independence of the Federal Reserve by giving the agency the authority to set rates of interest without the influence of the executive branch. Now, as the Fed faces calls to lower rates of interest Down prevent a possible recessionRepublican presidential candidate and former President Donald Trump wants the president to have more influence over rate of interest policy.
“I think the president should at least have a say” in setting rates of interest, Trump said at a Thursday news conference at his Mar-a-Lago resort in Palm Beach, Florida.
“The Fed often makes mistakes,” Trump added, noting that Fed Chairman Jerome Powell, whom Trump nominated for the position in 2017 “tends to take action a little later.”
Trump said setting rates of interest is more a matter of instinct and gut feeling.
“In my case, I’ve made a lot of money, I’ve had a lot of success,” Trump said. “I think I have better instincts than, in many cases, people who would be at the Federal Reserve or the chairman.”
Donald Trump speaks during a news conference at his Mar-a-Lago estate, August 8, 2024. Credit: Joe Raedle/Getty Images
The relationship between Powell and Trump was fraught with contention when Trump was in office from 2016 to 2020. Trump publicly criticized Powell for failing to raise rates of interest or lower them sufficiently at various points during his term and for repeatedly criticizing the Fed’s policies to the reporters AND in speeches.
Powell’s term ends in 2026, so the next president will pick the next Fed chairman. Trump said in February that I would not re-appoint Powell, if he wins; in July he he said would allow Powell to finish his term, and Powell he said that he’ll remain in his position until his term expires.
Following Trump’s comments on Thursday, Jared Bernstein, chairman of the White House Council of Economic Advisers, republished May’s evaluation of the importance of an independent central bank in the X sector.
“History could not be clearer about the long-term and damaging inflationary consequences of ignoring this lesson or of reversing the hard-won progress of the past half-century,” Bernstein wrote, citing the report.
Our @WhiteHouseCEA evaluation on the importance of central bank independence:
“History could not be clearer about the lasting and harmful inflationary consequences of ignoring this lesson or of reversing the hard-won progress of the past half-century.”https://t.co/v5szS6FPAv— Jared Bernstein (@econjared46) August 8, 2024