In 1951, The Treasury-Fed Agreement established Federal Reserve independence, giving the agency the authority to do so set interest rates without the influence of the executive branch. Now, just as the Fed faces calls for it lower interest rates THE avoid a potential recessionRepublican presidential candidate and former President Donald Trump wants the President to have more say in interest rate policy.
“I think the president should at least have a say” in setting interest rates, Trump said at a news conference Thursday at his Mar-a-Lago resort in Palm Beach, Florida.
The Fed has “got it very wrong,” Trump added, noting that Fed Chairman Jerome Powell, who Trump nominated for this post in 2017, “it's tending to be a little late for things.”
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Trump said that setting interest rates was more about instinct, or a gut feeling.
“In my case, I've made a lot of money, I've been very successful,” Trump said. “I think I have a better instinct 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 on August 8, 2024. Credit: Joe Raedle/Getty Images
Powell and Trump had a contentious relationship when Trump was in office from 2016 to 2020. Trump Powell called out publicly for not raising rates or lowering them enough at various points during his tenure and repeated criticism of the Fed's policies for journalists AND in speeches.
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Powell's term ends in 2026, so the next President will choose the next Fed chairman. Trump said in February that he would not rename Powell if he wins; in July he said he would allow Powell to serve out his term, and Powell said that he would remain in his post until the end of his term.
Following Trump's comments on Thursday, Jared Bernstein, chairman of the White House Council of Economic Advisers, reposted a May analysis of the importance of an independent central bank in X.
“History could not be clearer about the lasting and damaging inflationary consequences of ignoring this lesson or rolling back the hard-won progress of the past half-century,” Bernstein wrote, citing the report.
our @WhiteHouseCEA analysis of the importance of central bank independence:
“History could not be clearer about the lasting and damaging inflationary consequences of ignoring this lesson or reversing the hard-won progress of the past half-century.”https://t.co/v5szS6FPAv— Jared Bernstein (@econjared46) August 8, 2024