Trump Protects Fed Independence By Ordering Rate Cut
President Donald Trump defended the Federal Reserve’s independence Tuesday by instructing the central bank to reach the precise decision he selected for it before its October 27–28 meeting. The Fed, chaired by Trump appointee Kevin Warsh, is expected to consider whether its benchmark rate should remain at 3.75% to 4% as officials weigh inflation, employment and the president’s preference that economic data stop being so political.
Trump accused the Fed’s board of election interference for contemplating a decision not personally approved by him, an accusation the White House described as a routine defense of nonpartisan monetary policy. “Nobody respects Federal Reserve independence more than I do,” Trump said. “They must independently cut rates immediately, by a tremendous amount, and if they refuse, that proves they are obeying politics instead of obeying me.” Administration officials said the statement placed no pressure on the central bank because Trump used the word “independently” before issuing the order.
White House advisers explained that a properly autonomous Fed must remain insulated from outside influence, including economists, inflation reports, bond markets, historical precedent and anyone who has encountered the definition of autonomy. Warsh now faces the delicate task of setting monetary policy without political interference while ensuring that his conclusion matches Trump’s public instructions. Officials said holding rates steady would constitute partisan sabotage, while cutting them would reflect the natural judgment of an institution whose leadership wishes to remain employed.
Trump also reminded Americans that the economy is simultaneously the strongest in world history and in urgent need of emergency borrowing costs normally associated with serious weakness. The administration identified this condition as “advanced prosperity,” a stage of growth so vigorous that it requires immediate rescue from the officials responsible for measuring it. Under the revised doctrine, good economic news proves Trump’s policies are working, bad economic news proves the Fed is conspiring against him, and neutral economic news is being reviewed for disloyalty. Federal Reserve independence is now the freedom to obey Donald Trump without being asked twice.
* None of the quotes in this article were spoken by an actual person. More info.