A leading candidate to be President Donald Trump’s choice for Federal Reserve chair said that he would present the president’s views to Fed officials for their consideration but they could reject them if they chose when making decisions on interest rates.
Kevin Hassett, in an interview Sunday on CBS News’ “Face the Nation,” said he would continue to speak with Trump if he becomes the Fed chair. But when asked if Trump’s opinions on interest rates would have “equal weighting” with members of the Fed’s interest-rate setting committee, Hassett replied, “No, he would have no weight.”
“His opinion matters if it’s good, if it’s based on data,” Hassett continued. “And then if you go to the committee and you say, well, the president made this argument and that’s a really sound argument, I think, what do you think? If they reject it, then they’ll vote in a different way.”
Hassett’s comments come as Trump is reportedly in final interviews with potential replacements for the Fed’s current chair, Jerome Powell. Trump has emphasized that he expects whomever he nominates to lead the Fed will sharply lower the central bank’s key rate, which currently stands at about 3.6%. Trump has said it should be cut to 1% or lower, a view almost no economist shares. Trump’s outspokenness has raised concerns about the Fed’s independence from day-to-day politics under any chair he appoints.
Until Trump’s first election in 2016, presidents of both parties for several decades had avoided commenting publicly on Fed decisions, and usually refrained from doing so privately as well. Economists generally believe that a politically independent Fed is better at combating inflation, because it can take unpopular steps to keep prices down, such as raise interest rates.
On Friday, however, Trump said that he “certainly should have a role in talking to whoever the head of the Fed is” about rates.
“I’ve done great. I’ve made a lot of money, I’m very successful,” he said. “I think my voice should be heard.”
The Wall Street Journal reported Friday that Kevin Warsh, a fellow at the right-leaning Hoover Institution and former Fed governor, is Trump’s current favorite to replace Powell, whose term ends next May. But Trump has previously hinted that he would pick Hassett.
“I think the two Kevins are great,” Trump told the Journal.
Hassett, for his part, on Sunday said that “in the end, the job of the Fed is to be independent.”
“In the end, it’s a committee that votes,” he said. “And I’d be happy to talk to the president every day until both of us are dead because it’s so much fun.”
—Christopher Rugaber, AP Economics Writer