At a news conference Thursday at Mar-a-lago, Republican Party presidential candidate Donald Trump reiterated that the president should have a say in interest rates and monetary policy, Bloomberg reported. This view would run counter to the Fed’s long history of political independence.
Donald Trump challenged the Fed’s independence: “I make a lot of money and I have better instincts than Powell.”
“My own personal experience, which has made me a great deal of money and success, leads me to believe that in many cases my instincts may be sharper than those of fed officials or their chairmen,” Mr Donald Trump stressed in his speech
He further noted that he was frustrated that the executive branch lacked sufficient influence in interest rate decision-making, and directly criticized Jerome Powell, the current chairman of the Federal Reserve, for “Always being too late or too early” in setting interest rates.
Donald Trump’s comments come as the Fed is widely expected to cut interest rates at its September meeting, although they stress the timing of the cuts will depend on economic data. The Chicago Mercantile Exchange of the Fed cutting rates for the first time at its mid-september meeting is close to 75 per cent, according to CME Group FedWatch indicators.
The Fed has kept its benchmark 2023 rate at more than 20-year highs since July in an effort to curb persistently high inflation. However, as the labour market weakened, particularly after the unemployment rate rose to 4.3 per cent in July, some economists began to criticise the fed for moving slowly to ease interest rates.
At the same time, some U. S. states have begun pre-election early voting. Donald Trump has previously said he does not think the Fed should move rates in the run-up to the election, but he has repeatedly said in his campaign speeches that if he wins re-election he will push the fed to cut rates to boost growth and employment. However, he has also said the Fed should not cut interest rates so close to the election, a position that seems paradoxical. Markets believe Donald Trump is worried about a pre-election rate cut that would benefit the Democrats.
Donald Trump has been vague on interest rates, and his criticisms and expectations of the Fed appear to be at odds on different occasions. In an interview with the Bloomberg Businessweek earlier this summer, Donald Trump said he would focus on cutting costs so that the fed could cut rates later. Yet his campaign rhetoric often conflates interest rate cuts with broader policy issues such as lower regulation and energy prices.
Donald Trump’s campaign is trying to woo voters by emphasising tax cuts, more oil production and less regulation. Donald Trump thinks these unorthodox agendas will help him win more votes in Swing state. However, some economists and commentators are sceptical of Donald Trump’s policies, saying they could exacerbate economic volatility and inflationary pressures.