One of the main candidates for US President Donald Trump’s nomination for chairman of the Federal Reserve (Fed), Kevin Hassett stated that he would submit the president’s opinions to Fed members for evaluation, but that they could reject them, if they wished, when they decided on interest rates.
In an interview this Sunday, 14, on the program Face the Nationyes CBS NewsHassett stated that he would continue talking to Trump if he became president of the Fed. But, when asked whether Trump’s ideas about interest rates would have the same weight as those of members of the Fed’s Federal Open Market Committee (FOMC), Hassett replied: “No, they would not have any weight.”
“His opinion matters if it’s good, if it’s based on data,” Hassett continued. “And so if you go to the committee and say, Well, the president made this argument and it’s a really solid argument, I think, what do you think?, if they reject it, they’ll vote differently.”
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Hassett’s comments come as Trump holds final interviews with potential replacements for current Fed Chairman Jerome Powell. Trump emphasized that he expects the nominee to lead the Fed to drastically cut the central bank’s benchmark interest rate, currently in the range between 3.50% and 3.75%.
Trump has said the rate should be reduced to 1% or less, a view shared by virtually no economists. Trump’s outspokenness has raised concerns about the Fed’s independence from day-to-day policy, regardless of who it appoints.
Until Trump’s first election in 2016, presidents of both parties for several decades avoided commenting publicly on Fed decisions and generally refrained from doing so in private. Economists often believe that a politically independent Fed is more effective in fighting inflation because it can take unpopular measures to contain prices, such as raising interest rates.
On Friday, however, Trump declared that he “certainly should have a role in conversations with whoever is the head of the Fed” about interest rates. “I’ve done very well. I’ve made a lot of money, I’m very successful,” he said. “I think my voice should be heard.”
O Wall Street Journal reported on Friday that Kevin Warsh, a fellow at the conservative-leaning Hoover Institution and former Fed governor, would be Trump’s favorite to replace Powell, whose term ends in May next year. But Trump has previously hinted that he might choose Hassett. “I think both Kevins are great,” Trump told the newspaper.
Hassett, for his part, said today that “at the end of the day, the Fed’s job is to be independent.” “At the end of the day, it’s a committee that votes. And I would be happy to talk to the president every day until we both die, because it’s so much fun.”
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*Source: Associated Press
