Trump says Federal Reserve is an 'independent body' — but there's a major catch

Over the years, the relationship between President Donald Trump and the Federal Reserve has grown increasingly strained, with Trump constantly criticizing the central bank’s leadership and decision-making abilities. Tensions have emerged over the level of interest rates and other broader questions about the Fed’s independence. Meanwhile, recently, President Trump has once again commented on the role of the Federal Reserve, calling it an 'independent body' — at least 'in theory'. He even spoke about the reason why he chose Kevin Warsh as the next Fed chair nominee.

During an interview with NBC Nightly News, Trump was questioned on whether he sees the Federal Reserve chair as answerable to the president or as the leader of an independent institution. Responding to anchor Tom Llamas's question, Trump said, “Well, I mean, in theory it’s an independent body. But I think, you know, I’m a smart guy. I know the economy better than almost everybody.” He further expressed his confidence that an interest rate cut was on the way. As reported by NBC News, he said, “We’re way high, OK? We’re way high in interest." He added, “You can cut, cut, cut, and we do that anyway, and we did that. You know, we got rid of hundreds of thousands of federal workers. And those workers went out and got themselves jobs in the free enterprise system. And you know what? That’s called making America great again."

The news anchor went on to ask Trump if Warsh was completely aware that Trump expects him to cut interest rates. Responding to this, the President said, “I think he does, but I think he wants to anyway. I mean, if he came in and said, ‘I want to raise them ...’ If he said that, he wouldn’t have gotten the job.” Just last week, Trump revealed that he has selected Warsh to replace Jerome Powell as chair of the Federal Reserve. The announcement came after several months of public criticism from Trump, who has repeatedly held Powell responsible for failing to push interest rates down.

On the other hand, Powell has also blamed the White House for using an investigation as a tool to intensify pressure on the Fed to lower interest rates. It's important to note that the decisions regarding interest rates are not made by the chair alone. Instead, they are decided by the Federal Open Market Committee, which is a 12-member panel that includes seven permanent governors, the president of the New York Fed, and four regional Federal Reserve bank presidents who serve on a rotating basis.

Meanwhile, in the January meeting, the officials chose to hold rates unchanged after three consecutive reductions. Powell has also supported the Fed’s approach, emphasizing that the choices are guided by current inflation levels and conditions in the job market. According to the Bureau of Labor Statistics’ Consumer Price Index, inflation was recorded at an annual rate of 2.9% in December. During the first year of Trump’s second presidential term, inflation has fluctuated within a relatively narrow band, moving between 2.3% and 3%.

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