JD Vance Agrees Presidents Should Have a Say in the Fed’s Policies

The Republican vice-presidential nominee said presidents should have a say in determining the benchmark interest rate.

Share full article

“The political leadership in this country should have more say over the monetary policy,” JD Vance, the Republican vice-presidential nominee, said in an interview aired on Sunday.

JD Vance, the Republican vice-presidential candidate, said on Sunday that he “absolutely” agreed with Donald J. Trump’s recent suggestions that presidents should have a say in determining the Federal Reserve’s benchmark interest rate, signaling his support for political influence over the central bank.

“It would be a huge change,” Mr. Vance said on CNN’s “State of the Union.” “The political leadership in this country should have more say over the monetary policy.” He added that determining interest rates “should fundamentally be a political decision.”

Economists broadly agree that the central bank should be independent from political pressure to control inflation and preserve the value of a nation’s currency, and the president does not currently have direct influence over its decisions but does appoint its chair and the six other members of its Board of Governors.

During recent campaign rallies, however, Mr. Trump has promised to cut interest rates if elected, and The Wall Street Journal reported in April that Mr. Trump’s allies were seeking ways to undermine the independence of the Fed, which includes firing the chairman, Jerome H. Powell.

“President Trump is saying something that’s really important and actually profound,” Mr. Vance said on CNN. “You have so many bureaucrats making so many important decisions. If the American people don’t like our interest rate policy, they should elect somebody different to change that policy. Nothing should be above democratic debate in this country.”

It is unclear whether the president can fire a sitting Federal Reserve chair. Mr. Trump has said he would allow Mr. Powell to serve out his term.

During his presidency, Mr. Trump pressured Mr. Powell to lower interests rates and attacked the chairman and the board members for keeping rates higher than he wished. He once asked his followers on social media who was a bigger “enemy”: Mr. Powell or President Xi Jinping of China.

Despite Mr. Trump’s suggestions, some of his previous administration officials seem to disagree.

“Thank goodness we have an independent Fed,” Jay Clayton, the chairman of the Securities and Exchange Commission during the Trump administration, said on Tuesday.

While Mr. Trump wants lower rates, he has said that the Fed should not lower them before the election, implying a lower rate that can stimulate economic growth would be a political boon to incumbent Democrats.

Fed officials have held interest rates at 5.3 percent — the highest level in around two decades — in an effort to snuff out painfully high inflation in 2022 and 2023 amid the coronavirus pandemic and Russia’s invasion of Ukraine. After a significant slowdown in inflation, Mr. Powell has signaled that rate cuts are approaching and could start in September.

Minho Kim covers breaking news and climate change. He is based in Washington. More about Minho Kim

See more on: Donald Trump, J.D. Vance, 2024 Elections, Republican Party, Federal Reserve (The Fed)