During a press conference on Thursday from his Florida resort home, Mar-a-Lago, former president and 2024 Republican nominee Donald Trump suggested that the president should be able to exert more influence over the policy of the Federal Reserve than they do today.
Near the end of the press conference — during which Trump agreed to debate Democratic rival Kamala Harris next month — Trump was asked about the Fed and his outlook for it were he elected to a second term.
“The Federal Reserve is a very interesting thing, and it’s sort of gotten it wrong a lot,” Trump said. “[Chair Jerome Powell] is tending to be a little bit late on things. He gets a little bit too early and a little bit too late. And, you know, that’s very largely a gut feeling. I believe it’s really a gut feeling. And I used to have it out with him. I had it out with him a couple of times, very strongly. I fought him very hard, and we get along fine.”
Trump nominated Powell to serve as Fed Chair in late 2017, and he took office in early 2018 following a tenure with the Fed’s board of governors. Trump described his relationship with Powell as good but said Thursday that his own business career would be beneficial in shaping Fed policy.
“We get along fine. But I feel the president should have at least a say in there, yeah,” Trump said. “I feel that strongly. 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.”
Traditionally, the president has had limited influence over Fed policy. Framers of the central bank expressed early beliefs that it should be sheltered from political influence as much as possible in order to focus solely on economic trends and data to drive decisions.
While members of the board, the chair and vice chair are appointed by presidents and confirmed by the Senate, the full term of office for a governor is 14 years. This ensures that a governor who serves the full length of a term will span multiple presidential administrations, thereby reducing political pressure on any single president when making appointments. Once a governor serves a full term, they are ineligible for reappointment.
Chairs and vice chairs are elected to four-year terms. The winner of this fall’s presidential election will nominate the next Fed chair as Powell’s term ends in May 2026.
In a recent interview with HousingWire, former Federal Housing Finance Agency (FHFA) Director Mark Calabria suggested that the former president’s assertions — and “quiet” moves being taken by his allies to expand executive influence over the Fed, along with the resulting alarm some economists have expressed at the idea — are overblown.
“The Fed operates within the government,” Calabria said last month. “The Fed coordinates with administrations. The argument that Trump is somehow bringing a threat to the Fed’s independence is grossly exaggerated, if not completely false. I don’t have a lot of sympathy for that argument.”
Calabria added that every administration behaves in such a way “to some degree” but that different administrations go about it in different ways.
Certain economists disagree. Some point to the run-up to the presidential election in 1972, when Richard Nixon aimed to influence the Fed by pressuring Chair Arthur Burns to maintain an open monetary policy.
In a 2004 column published by the National Review, columnist, historian and former White House policy adviser Bruce Bartlett described the pressure campaign as the “classic case of the Fed subordinating good policy to politics.” Nixon used leverage to keep monetary policy loose despite rising inflation, leading to price controls and an “implicit” agreement from Burns to keep money flowing.
Following the election, price controls broke down, Bartlett recounted.
“Inflation jumped to 8.7% in 1973 and 12.3% in 1974,” he said. “Another recession began in November 1973 and didn’t end until March 1975. These poor economic conditions created fertile soil for Nixon’s enemies when the Watergate scandal broke. Had the economy been stronger, Nixon probably would have survived it, just as a strong economy unquestionably helped Bill Clinton weather the Monica Lewinski scandal.”
Trump regularly lashed out at Powell over the course of his term in office, and Powell said in a 2019 congressional hearing that he would not comply with a firing from the president if one came.
Jared Bernstein, chair of the White House Council of Economic Advisers, who currently works under President Joe Biden, criticized Trump’s statements, according to reporting from The Hill.
“History could not be clearer regarding the lasting & damaging inflationary consequences of ignoring this lesson [of political influence over the Fed] or reversing the hard-earned progress of the past half century,” Bernstein shared in a post on social media platform X on Thursday.
