Source: Cailian
Financial Associated Press, September 1 (Editor Huang Junzhi) Recently, US President Trump has launched a continuous offensive against the independence of the Federal Reserve: after failing to put pressure and threaten Fed President Powell to cut interest rates, last week he "unilaterally" announced the dismissal of Federal Reserve Governor Lisa Cook.
Trump's series of actions have triggered concerns about the independence of the Federal Reserve, but he himself doesn't seem to care. His government officials have recently publicly stated that the president should have a say in monetary policy.
That seems to be overlooked by anyone, with Republican Senator James Lankford from Oklahoma recently saying that the U.S. central bank should set interest rates while the president and Congress play different roles.
"All of us have a role to play. We just have different roles. The Fed is at its best when it is independent, but they are not independent of the American people as a whole. Let's do our part," he said.
President Trump has been blasting the Federal Reserve and its Chairman Jerome Powell for not lowering interest rates for months. He also unilaterally fired Cook last week for mortgage fraud. But Cook and her supporters say the accusation is an excuse to expel her so Trump can appoint an ally to the Fed to promote his policy aspirations.
It also seems to be true. There are currently seven members on the Federal Reserve Board of Governors, and Trump has appointed two of them. He will also nominate someone to replace Adriana Kugler, who announced his resignation this summer, while Trump originally chose Stephen Miran, one of his main economic advisers.
But last week, he raised the possibility of "moving Milan to Cook's seat" and picking another person to replace Coogler. In this way, the "independent foundation" of the Federal Reserve will be completely destroyed, and Powell will become a "lame duck".
U.S. Vice President Vance even said last week that it was "ridiculous" to say that the president could not fire Fed officials or help formulate monetary policy.
“I feel very strongly that the president of the United States is more capable of making these decisions,” he said.
When asked about the remarks, Senator Lankford said he believed the Federal Reserve should set interest rates, and the president and members of Congress set taxes and tariffs respectively to set economic policy.
Democratic Representative Ro Khanna also said in an interview that the Federal Reserve needed independence, but she also called on Cook to publish mortgage documents to ensure transparency.
"She should be transparent and show us that this is just a political football," he said.
"But it has nothing to do with the specific situation of Lisa Cook. It has to do with Trump following Richard Nixon's example of intervening in the Fed, bullying the Fed," Khanna said. He was referring to former President Nixon's pressure on the Federal Reserve to keep interest rates low before the 1972 election. Nixon won that election, but resigned two years later over the Watergate scandal.
Khanna also said that Trump's tariff policies are fueling inflation, complicating the Federal Reserve's interest rate cuts.