Trump's Controversial Pitch: I Want Sway Over the Fed

During his news conference on Thursday, Donald Trump broached a controversial topic—whether presidents should have more direct influence over interest rates. "I feel the president should have at least (a) say in there," Trump said, as quoted by Reuters. "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." While the president nominates the head of the central bank as well as the six members of its board of governors, the Fed operates independently of the White House.

• In opposition: The Biden administration has made clear it wants things to remain the way they are, as illustrated in this guidance from May. "History could not be clearer regarding the lasting and damaging inflationary consequences of ignoring this lesson," it reads. And on Thursday, in response to Trump's comments, White House Council of Economic Advisers Chair Jared Bernstein emphasized the "importance of central bank independence" in a tweet, per the Hill.
• In the works? In April, the Wall Street Journal reported that Trump allies already were drawing up plans to diminish the Fed's clout and give the president more say in decisions, should Trump win re-election. The Trump campaign has officially disavowed the report. Meanwhile, in an appearance on Fox News last week, Trump promised lower interest rates in his second term, notes the New York Times.
• The fear: Economists point to the early 1970s, when they say President Nixon pressured his Fed chief to make decisions based on the upcoming 1972 election rather than on fiscal realities, per Reuters. They blame the years of high inflation that followed partly on Nixon's interference.

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