For a long time, Trump has been dissatisfied with the lack of greater influence of the executive branch in interest rate decisions. He has publicly stated multiple times that the president should have some say in Federal Reserve policy.

Although claiming not to oust Fed Chairman Powell, Trump's ambition to intervene in the Federal Reserve is increasingly evident. On October 13, Washington reporter Ben Werschkul once again analyzed this hot topic, suggesting that Trump and his allies have proposed a series of ideas, hinting that if the Republican Party wins in the 2024 election, the Fed's independence may be weakened.

Current proposals include nominating a "shadow" Fed Chairman, abolishing the Fed's "dual mandate" and focusing only on controlling inflation, and attempting to reshape the Fed system. Although Trump is trying to distance himself from some of these radical proposals, if the former president wins again, there may still be a series of measures that could fundamentally change the relationship between the White House and the Fed.

In a recent Fed rate cut action, Trump has vehemently criticized, saying, "Rates are dropping too fast," before the election, "this is obvious political manipulation."

However, Democratic presidential candidate Harris firmly denied. She recently emphasized respect for the independence of the Federal Reserve, saying: "If elected president, I will never interfere with the Fed's decisions."

"Shadow" Fed Chairman

"Shadow" Fed Chairman is a new term coined by Trump's economic advisor Scott Bessent. Recently, Bessent stated in an interview that Trump could nominate a "shadow" chairman, essentially making Powell a "lame duck" during his term.

Jerome Powell's term as a member of the Federal Reserve Board ends in 2028, but his term as the Federal Reserve Chairman will end earlier, in 2026. Washington journalist Werschkul analyzes that Bessent's idea is to plan the future direction of the Federal Reserve during Powell's term. This also means that if Trump returns to the White House, he may seize Powell's power of speech and sideline him.

Bessent said:

Based on the concept of forward guidance, nobody will care about what Powell says afterward.

Bessent, former Chief Investment Officer of Soros Fund Management, may be a new candidate for Treasury Secretary if Trump is elected. Although Trump has not publicly supported this idea, he has mentioned Bessent multiple times and referred to him as 'one of the top Wall Street analysts'.

The '2025 Plan' envisions reshaping the bureaucratic system of the Federal Reserve.

The conservative think tank, the Heritage Foundation, released the '2025 Plan' which proposes a series of reform suggestions for the Federal Reserve. This over 900-page blueprint suggests changes ranging from economic intervention methods to institutional reforms, aiming to 'take back monetary decision-making from the Fed and return it to the people.'

Although Trump has tried to distance himself from some of these proposals, the authors of these suggestions are mostly his former aides. Among them, the 13-page section about the Federal Reserve was written by Paul Winfree, who previously served as the Deputy Assistant to the President for Domestic Policy in the Trump administration.

Winfree advocates cutting back the expanding powers of the Federal Reserve since its establishment in 1913, such as abolishing the Fed's 'dual mandate' (i.e., mission to promote maximum employment and maintain inflation stability), and focusing solely on controlling inflation.

Washington reporter Werschkul added that another proposed method is for Trump to strengthen control over federal bureaucracies and independent government institutions, such as the Fed, the Federal Trade Commission, etc.

Trump and his allies advocate reducing the political protection of government employees, planning to expand the president's 'political' appointment power from the current 4,000 to 0.05 million, especially targeting institutions like the Fed that currently maintain a distance from the White House. Trump has stated, 'We need to make it easier to dismiss those rogue bureaucrats who deliberately undermine democracy,' and claims that if these reforms are implemented, 'Washington will become completely different.'

Editor/ping