Trump Allies Reportedly Planning to Limit Federal Reserve’s Independence

Allies of former President Donald Trump are drafting plans to limit the Federal Reserve’s independence from political influence, according to a Wall Street Journal (Center bias) report. 

The Details: The plan, outlined in a 10-page document, suggests that Trump would be consulted on interest rate decisions in a potential second term. While Trump campaign officials told the Journal that the plans should not be considered “official,” such a move would not be out of line with other efforts by Trump allies. This includes the Heritage Foundation’s “Project 2025,” which calls for Trump to end rules requiring federal employees be hired on merit instead of political allegiance. 

For Context: While Fed board members are nominated by the president and confirmed by the Senate, the Fed operates independently to keep management of the economy separate from partisan politics. Trump nominated the current Fed chair, Jerome Powell, in 2017 but said in February that he would not reappoint him, accusing the Fed of working in President Joe Biden’s political favor. Biden nominated Powell for a second term in 2021, rejecting calls to appoint Lael Brainard, the board’s sole Democrat. Powell, a Republican, has largely been the face of the Fed’s efforts to quell persistent inflation by raising interest rates.

How the Media Covered It: Coverage sometimes echoed partisan attitudes about Trump and the Fed. While a Common Dreams (Left bias) headline said, “Right-Wingers Plot to Give Trump Control,” a Daily Wire (Right bias) headline said Trump’s allies “Want Fed Answerable To Him.” The New Yorker (Left bias) went further, saying Trump’s allies wanted a “Federal Reserve Coup.” MarketWatch (Center bias) highlighted economists who called the plan the “bad idea of all bad ideas,” but also noted some who said the Fed “should do the people’s bidding.”