Kevin Hassett a leading candidate for Federal Reserve Chair when Jerome Powell leaves the post, said in an interview that he would present President Donald Trump’s views to Fed officials, but said they could reject the president’s ideas when making interest rate decisions.
Hassett, in an interview Sunday on CBS News’ “Face the Nation,” said he would continue to speak with the president if he becomes the Fed chair. When asked if Trump’s opinions on interest rates would have “equal weighting” with members of the Fed’s interest-rate setting committee, Hassett said, “No, he would have no weight.”
Hassett continued: “His opinion matters if it’s good, if it’s based on data. 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.”
Powell Leaves Chairmanship in May
AP News said that Hassett’s comments come as Trump reportedly is in final interviews with potential replacements for Powell. Trump said 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%, AP said.
Trump has said it should be cut to 1% or lower, a view that is shared by almost no economist, AP said. Trump’s outspokenness has raised concerns about the Fed’s independence from day-to-day politics under any chair he appoints.
The AP reported that until Trump’s first election in 2016, presidents of both parties for several decades avoided publicly or privately commenting Fed decisions. Thew news agency said that 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.
Trump said Friday, however, 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,” Trump said. “I think my voice should be heard.”
Friday, The Wall Street Journal reported that Kevin Warsh, a fellow at the right-leaning Hoover Institution and former Fed governor, is the president’s current favorite to replace Powell, whose term ends in May.
Trump 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.”
The Fed committee voted Dec. 10 to cut interest rates a quarter point.
