Trump softens his stance: The Fed doesn't necessarily have to listen to me

Republican presidential candidate Trump played down criticism of weakening the Fed's independence on Monday, saying he should be free to share his views on interest rate policy.

After attending an event in the swing state of Pennsylvania on Monday, Trump told Bloomberg News, "I think the president can speak. But that doesn't mean they have to listen."

Trump said that he had "lobbied" Fed Chairman Powell on interest rate issues during his last term as president, "which may or may not have had an effect." He said, " Of course, the president can talk about interest rates, because I think I have a good intuition. This doesn't mean I'm giving orders, but it does mean I should have the right to discuss this issue like anyone else."

High interest rates have intensified scrutiny of Fed decisions, as the cost of mortgages has made prospective homebuyers hesitant. U.S. Vice President Harris unveiled her plan last week to make housing more affordable by providing $25,000 in down payment assistance to first-time homebuyers.

Trump called this idea "totally wrong," saying it would lead to more severe housing shortages and price increases. When asked if he would provide any assistance to potential homebuyers struggling with down payments, Trump said, "I might do that."

Giving more funding to the executive branch will challenge the long-standing practice of allowing the Fed to independently implement monetary policy (i.e., by setting interest rates) free from political interference.

Since the Clinton administration, both Democratic and Republican presidents have avoided commenting on Fed decisions and broader interest rate issues to avoid being perceived as trying to influence the Fed, which is a concern for the markets.

Trump's appearance on Monday is part of a multi-pronged campaign strategy aimed at countering the Democrats' nomination of Harris as a presidential candidate, gaining support in key swing states, but most importantly, focusing on economic issues. Polls show that economic issues are the top concern for voters, and for most of the 2024 election cycle, he has an advantage over Biden and Harris on economic issues.

Polls show that Harris is either tied with or ahead of him in support. Before Harris replaced Biden as the Democratic presidential candidate, a core part of Trump's campaign strategy was to evoke nostalgia among voters for the pre-pandemic economy in polls.

At a press conference earlier this month, Trump said the Fed's rate adjustments were "a little too early, and a little too late," and as a businessman, the former president claimed to have "better intuition in many cases than Fed officials or the chairman."

He refused on Monday to reveal who he might appoint as Fed chairman, saying "it's too early for that now". The former president had previously stated that he would not reappoint Powell after his term as chairman ends in 2026. Trump has criticized Powell in the past, saying that the Fed under his leadership has "no guts, no sense, no vision."

Harris differs from Trump on the issue of Fed independence, saying earlier this month to reporters that she "strongly" opposes Trump's views on Fed independence and that if she were president, she would "never interfere with Fed decisions" History has shown that countries allowing politicians to dominate monetary policy face higher inflation. In the United States, former President Nixon in the early 1970s pushed then-Fed Chairman Burns to adopt a looser monetary policy, triggering a costly cycle of inflationary prosperity followed by recession.

Head-to-Head

As Harris and her party gathered in Chicago for the Democratic National Convention, Trump delivered a speech on economic and energy policies during his visit to Pennsylvania as part of his week-long blitz, attempting to shift focus away from his opponents in key swing states.

Trump is intensifying his campaign this week, with plans to visit Michigan, North Carolina, and Arizona, holding daily press conferences with his surrogates. This move is aimed at contrasting sharply with Harris, who has not faced a face-to-face interview since becoming the party's nominee. Harris has pledged to complete this task by the end of the month.

On Monday, Trump visited a machine shop and manufacturing plant in York, Pennsylvania, emphasizing his economic agenda. In recent weeks, Republican allies have urged Trump to focus more on economic and immigration issues, seen as political liabilities for Harris.

A poll conducted by ABC News, The Washington Post, and Ipsos from August 9 to 13 showed Harris leading Trump 49% to 45%, but the former president leading by 9 percentage points on economic issues. The founder of the largest super PAC behind Harris also stated on Monday that their own internal polling results are not as "optimistic" as external polls suggest.

Trump vows that if re-elected, he will extend expiring tax cuts and impose tariffs on America's allies and adversaries