“Trump can\u2019t influence the Federal Reserve much \u2014 for right now.<\/p>\n\n\n\n
When it comes to interest rates, which are basically how much it costs to borrow money, Trump can complain they are too high (or too low) like any other American, but the Fed\u2019s leaders are the only government officials with the power to adjust those rates. The Fed has lowered interest rates this year as inflation has declined, but it kept rates fairly high for the last few years, in part to fight pandemic-era inflation. Even with the lower rates, however, many Americans are still finding it too expensive to borrow money so they can make big purchases like a home.<\/p>\n\n\n\n
Forcing or pressuring the Fed to lower interest rates won\u2019t necessarily fix high borrowing costs for Americans; the interest rates set by the Fed are actually short-term costs that banks pay to each other to borrow money. The Fed\u2019s decisions influence the cost of borrowing, but there are a lot of other factors<\/a> that go into consumer credit.”<\/p>\n\n\n\n …<\/p>\n\n\n\n “Trump might try to meddle in the Fed\u2019s affairs is by trying to fire Federal Reserve Chair Jerome Powell. Trump appointed Powell, but was highly critical of Powell\u2019s decision-making<\/a> during his first term, and reportedly looked into<\/a> whether he could fire the Fed chair.<\/p>\n\n\n\n Powell has said he will serve through the rest of his term, which doesn\u2019t end until 2026<\/a>, but has declined to say whether he would stay on for a third term.<\/p>\n\n\n\n Legally, Trump cannot force Powell to resign or fire him. Members of the Fed\u2019s Board of Governors, which Powell is part of<\/a> as the Fed chair, can only be fired<\/a> for wrongdoing or job performance reasons, not differences in policy. Trump could try to fire Powell claiming he\u2019s performing his job poorly, but that decision would probably embroil the president-elect in a drawn-out legal battle<\/a>“<\/p>\n\n\n\n …<\/p>\n\n\n\n “Because the Federal Reserve was created by an act of Congress, it would take congressional action to make any changes to how it works. Congress has made some changes over the decades, but there\u2019s no signal right now that most lawmakers are willing to challenge the independence of the institution.”<\/p>\n\n\n\n …<\/p>\n\n\n\n “come May 2026, Trump will be able to have some congressionally authorized say in Fed policy. That\u2019s when he\u2019ll be required to appoint a Fed chair for a new four-year term, who\u2019ll then have to undergo Senate confirmation. That may be Powell, or it could be someone more compliant with Trump\u2019s idea of what the Fed should be.”<\/p>\n\n\n\n