Key Points
- Fed chair candidate Kevin Hassett said President Trump’s opinion would have “no weight” in a vote on interest rates.
- Trump is demanding sharp rate cuts and believes his voice should influence the Fed’s decisions.
- Trump’s public pressure breaks with a long-standing tradition of respecting the Fed’s independence.
- Hassett said he would present a “sound argument” from Trump to the Fed committee, but they would be free to reject it.
A leading candidate to be President Donald Trump’s next Federal Reserve chair said Sunday that he would protect the central bank’s independence from political pressure. In an interview, Kevin Hassett stated that while he would listen to the president’s opinions on interest rates, those views would have “no weight” when it comes time for the Fed’s committee to vote.
Hassett’s comments come as Trump is reportedly finalizing his choice to replace current Fed Chair Jerome Powell. The president has been unusually outspoken, demanding that the Fed slash its key interest rate to 1% or lower, a view few economists share.
Trump argues that because of his business success, his “voice should be heard” on monetary policy. This breaks with decades of tradition where presidents avoided commenting on Fed decisions to preserve its political independence.
Speaking on CBS’s “Face the Nation,” Hassett tried to walk a fine line. He explained that if the president made “a really sound argument” based on data, he would present it to the Fed’s decision-making committee for their consideration.
However, he stressed, “If they reject it, then they’ll vote in a different way.” Hassett insisted that “in the end, the job of the Fed is to be independent.”
The debate highlights a significant concern for the economy. Economists widely believe that an independent Fed is better able to fight inflation because it can make unpopular decisions without political interference. The financial world is now watching closely to see whether Trump’s eventual nominee can withstand the president’s very public demands.
