Donald Trump’s aides have drawn up secret plans to oust the chairman of the Federal Reserve and allow the president to set interest rates, according to reports.
Allies are said to have drawn up a range of proposals for the way monetary policy could be run in a second Trump administration, including rolling back the independence of the central bank, which has been critical to the functioning of the economy and financial system in recent decades.
Supporters of the Republican candidate have compiled a 10-page document with a new vision for the running of the central bank and monetary policy, according to the Wall Street Journal.
It includes the authority to eject Jerome Powell from his position as chairman of the rate-setting Federal Open Market Committee.
Mr. Trump appointed Mr. Powell to the position in his first term as president, having declined to give the incumbent, Janet Yellen, a second term at the Federal Reserve.
Ms Yellen is now Treasury secretary for Joe Biden, the president.
The document also suggests Mr. Trump could be consulted on interest rate decisions by the Federal Reserve chair, who would then negotiate the final decision on borrowing costs with other policymakers on his behalf.
Less sweeping changes to the central bank could include exposing its regulations to more regular reviews by the White House, the WSJ reported.
As president, Mr. Trump regularly called for lower interest rates to boost the economy and expressed dissatisfaction with Mr. Powell’s decisions. In 2019, he said Fed officials had “no guts, no sense, no vision”.
Moves to limit the independence of the Fed would likely prove controversial. The independence of central banks has become a central pillar of the modern financial system.
Michael Pearce at Oxford Economics said: “Any serious attempt to undermine the Fed would have a high risk of having the opposite effect. There are many examples from history where political pressure for lower rates has had the opposite effect and pushed the Fed to lean towards tighter policy than otherwise.”
