Donald Trump: ‘I’ll Choose a Fed Chair Who Prioritizes Lower Interest Rates!’

Donald Trump recently stated that he will only choose a new chair for the Federal Reserve if they agree to lower U.S. interest rates. He believes borrowing costs should drop to 1%. His harsh words for current chair Jay Powell, calling him a “stubborn mule,” have raised eyebrows. Trump said he would prefer Powell to resign, but for now, Powell plans to stay until his term ends in May 2026.

During a recent press briefing, Trump mentioned, “Whoever comes in must lower rates. If I think they will keep rates high, I won’t choose them.” He has openly criticized the Fed for maintaining interest rates between 4.25% and 4.5%, especially after a cutting cycle began in 2024.

Trump’s comments come amid ongoing discussions about potential candidates to replace Powell. He has a shortlist of a few names, though the White House maintains that no final decision is close. Some candidates, like Christopher Waller, are advocating for rate cuts soon, while others like Kevin Warsh are more cautious, focusing on inflation instead.

Experts have noted that Trump’s strategy could backfire. Robert Barbera, an economist at Johns Hopkins University, warned that trying to exert too much control could harm the chair’s effectiveness, saying, “The Fed is not a kingship; it operates through a committee where many members have a vote.”

Former adviser to Powell, Jon Faust, echoed this sentiment, suggesting that if the new chair acts too aggressively, it could harm relationships within the Federal Open Market Committee. Raghuram Rajan, an academic from the University of Chicago, added that the structure of the Fed generally protects it from political influence, making it hard for the president to sway decisions.

The current situation underscores the intricate balance of power within the Federal Reserve. As financial markets watch closely, Trump’s comments and potential moves could significantly impact future economic policies.

For more insights into the Federal Reserve’s structure and influence, you can explore the Federal Reserve’s official site here.

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