A report published late Thursday by The Wall Street Journal said that allies of former president and presumptive 2024 Republican nominee Donald Trump are working behind the scenes on policies that could make the Federal Reserve less independent, if Trump were reelected this fall.
Former Trump administration officials have been discussing several proposals, ranging from “incremental policy changes to a long-shot assertion that the president himself should play a role in setting interest rates,” the outlet reported.
The group believes that Trump should be consulted on any decisions involving benchmark interest rates, that the White House should be allowed to review Fed regulatory proposals, and that the U.S. Department of the Treasury should be given wider latitude to police the Fed.
The Journal noted that it couldn’t determine whether Trump had approved of these plans or was aware of them, although unnamed sources “believe the work has received the blessing of the former president.”
Two Republican lawmakers publicly opposed the idea of the president becoming more influential in monetary policy and indicated their desire to keep the central bank relatively free from constraints.
“Given their charge, their independence is critical to doing it in an unbiased, nonpolitical way,” Sen. Kevin Cramer of North Dakota told the Journal. “There’s a reason that there’s not just one decision maker — that there are safeguards built into a board of governors.”
“I have to think about the Fed for the next 50 years, not the next four, and independence is important,” Sen. Thom Tillis of North Carolina added.
The Fed has been under fire for the past two years after it began raising interest rates to combat 40-year high inflation. The Federal Open Market Committee (FOMC) approved 11 increases between March 2022 and July 2023, with the benchmark rate rising from near zero to a range of 5.25% to 5.5%.
Trump has been a staunch critic of interest rate policies in the past. During his first term in office, Trump reportedly sought to remove Jerome Powell, whom he appointed as Fed chair in 2018. Powell’s current term as chair is set to end in May 2026 and Trump has publicly stated that, if he returns to the White House, he would not reappoint Powell.
“Lawyers who have studied the issue believe the president lacks the power to fire Fed governors over a policy dispute,” the Journal stated in its report. “Whether the president has the authority to demote the chair and replace him or her with a sitting governor isn’t clear. When he was in office, Trump privately contemplated dismissing Powell but never did so, in part because his advisers told him he didn’t have the authority.”