President Donald Trump has made it clear that he wants the Federal Reserve to slash its key rate to 1% or lower, a stance that has raised alarms about the Fed’s independence.
Hassett’s View on Trump’s Influence
Kevin Hassett, speaking on CBS News’ “Face the Nation” Sunday, said he would keep talking to Trump if the former president became Fed chair. When asked whether Trump’s opinions on rates would have “equal weighting” with the Fed’s rate-setting committee, Hassett replied, “No, he would have no weight.” He added, “His opinion matters if it’s good, if it’s based on data,” and continued, “And then if you go to the committee and you say, well, the president made this argument and that’s a really sound argument, I think, what do you think? If they reject it, then they’ll vote in a different way.”
Trump’s Fed Replacement Process
Trump is reportedly in final interviews with potential replacements for current chair Jerome Powell, whose term ends next May. Trump has said he expects whoever he nominates to lead the Fed to sharply lower the central bank’s key rate, which stands at about 3.6%, to 1% or lower-a view that almost no economist shares. Trump’s outspokenness has raised concerns about the Fed’s independence from day-to-day politics under any chair he appoints. On Friday, Trump said he “certainly should have a role in talking to whoever the head of the Fed is” about rates. “I’ve done great. I’ve made a lot of money, I’m very successful,” he said. “I think my voice should be heard.”
The Wall Street Journal reported Friday that Kevin Warsh, a Hoover Institution fellow and former Fed governor, is Trump’s current favorite to replace Powell. Trump has previously hinted that he would pick Hassett. “I think the two Kevins are great,” Trump told the Journal.
The Debate Over Fed Independence
Hassett said on Sunday that “in the end, the job of the Fed is to be independent.” He added, “In the end, it’s a committee that votes,” and joked, “And I’d be happy to talk to the president every day until both of us are dead because it’s so much fun.” The comments come at a time when presidents before 2016 avoided commenting publicly on Fed decisions and usually refrained from doing so privately as well. Economists generally believe that a politically independent Fed is better at combating inflation, because it can take unpopular steps to keep prices down, such as raising interest rates.
Key Takeaways
- Kevin Hassett says Trump’s Fed advice would carry no equal weight, even if he becomes chair.
- Trump seeks a Fed chair who will cut the key rate from 3.6% to 1% or lower.
- Concerns rise that Trump’s involvement could threaten the Fed’s long-term independence.
In summary, the conversation between Trump and potential Fed leaders underscores the tension between presidential influence and the institutional independence that the Federal Reserve has historically maintained.
Morgan J. Carter is a Texas-based journalist covering breaking news, local government, public safety, and community developments across Austin. With more than six years of reporting experience, Morgan focuses on delivering accurate, clear, and timely stories that reflect the fast-moving pulse of the city.
At newsofaustin.com, Morgan reports on everything from severe weather alerts and traffic updates to city council decisions, crime reports, and the issues shaping daily life in Austin. Known for reliable fact-checking and a strong commitment to public-interest journalism, Morgan brings readers the information they need to stay informed and engaged.
When not tracking a developing story, Morgan enjoys exploring Austin’s neighborhoods, attending local events, and connecting with residents to share the voices and experiences that define the community.
