Trump and Vance Advocate for Presidential Influence in Federal Reserve Policies

By Richard Cowan

WASHINGTON (Reuters) – Republican U.S. vice presidential candidate JD Vance expressed support for Donald Trump’s assertion that the president should influence Federal Reserve Board policies, including interest rates, labeling these as “political” decisions.

During an interview on CNN’s State of the Union, Vance elaborated on Trump’s position that U.S. political leadership should have a larger role in monetary policy.

While the president nominates members of the Federal Reserve Board, historical precedence suggests that the White House should avoid interfering with the Fed’s monetary decisions to prevent undue short-term political pressure that might harm the economy in the long run.

Vance remarked, “I agree with him (Trump). That should fundamentally be a political decision. Agree or disagree, we should have America’s elected leaders having input about the most important decisions facing our country.” This signifies a potential shift from the traditional view of the Fed as an independent institution.

In a recent Florida press conference, Trump emphasized his business acumen, stating, “I think that in my case, I made a lot of money, I was very successful, and I think I have a better instinct than many people that would be on the Federal Reserve or the chairman.”

However, Trump’s business history includes defaults on interest payments and bankruptcies, which he did not address.

Democratic presidential nominee Kamala Harris publicly disagreed with Trump, reaffirming the Fed’s independence: “The Fed is an independent entity and as president I would never interfere in the decisions that the Fed makes,” she told reporters in Phoenix, Arizona.

In March 2022, the Fed began increasing interest rates to combat inflation as the U.S. economy recovered from COVID-19 pandemic impacts. Rate adjustments affect borrowing costs across various sectors, including mortgages and credit cards.

Wall Street anticipates the Fed may soon reverse course, given recent inflation trends. As of June, inflation had decreased to 2.5%, nearing its targeted 2% after peaking at 7.1% in June 2022.

The exchange between Trump and Vance comes amid discussions surrounding the “2025 Presidential Transition Project,” which proposes extensive reforms to the federal government should Trump prevail in the upcoming November election.

Among the recommendations are exploring the Federal Reserve’s mission, alternative systems, and financial regulatory structures. As Democrats criticize “Project 2025,” Trump has distanced himself from its proposals.