Republican candidate Donald Trump stated on Thursday that U.S. presidents should have influence over Federal Reserve decisions, marking his clearest signal yet of his intention to challenge the central bank’s independence if he returns to the White House.
“I feel the president should have at least (a) say in there,” Trump said at his Mar-a-Lago residence in Florida. “I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than in many cases, people that would be on the Federal Reserve or the chairman.”
In April, the Wall Street Journal reported that Trump allies were drafting proposals to weaken the Fed’s independence if he wins. Although the Trump campaign distanced itself from this report at the time, his recent comments suggest he supports the idea that the president should be consulted on interest rate decisions, and that Fed banking regulations should be subject to White House review.
Currently, the Fed chair and the other six members of its board of governors are nominated by the president and confirmed by the Senate. However, the Fed operates with significant independence in making policy decisions that significantly impact the U.S. economy and global markets. This independence is crucial to maintaining the U.S. dollar’s status as the world’s reserve currency, which allows the U.S. government to borrow on global bond markets at low interest rates, despite its massive debt load.
The next president, whether Trump or Democratic candidate Kamala Harris, will have the opportunity to appoint the next Fed chair within the first two years of their term.
Economists are concerned that a nominee willing to comply with Trump’s wishes could lead to policy errors, similar to those in the early 1970s when Fed Chairman Arthur Burns was pressured by President Richard Nixon to maintain an expansionary monetary policy, despite rising inflationary pressures.