Since the economy was a key talking point in the presidential election, when can we expect Republican Donald Trump to save us money on everyday essentials?
University of Missouri assistant political science professor Charles Zug said the Federal Reserve has more power over the economy than the president.
“It’s reasonable for Americans, for any country in a representative democracy, to hold their governments accountable for their financial well-being…broadly. Within that though, looking at the actual levers of power that a president in the United States has to affect those outcomes, there’s real limits,” he told Missourinet. “I mean, inflation is largely the consequence of what the Federal Reserve System does.”
On Thursday, the Federal Reserve lowered the interest rate another quarter-percent,
to a range between 4.5% and 4.75%. The Fed is trying to find the sweet spot between interest rates that are high enough to control inflation but not so high that it could weaken the job market.
“If people’s bank accounts get bigger after January, when Trump gets sworn in and the new Congress gets sworn in, it’s not going to be the direct result of anything they’ve done, unless they pass another stimulus package and put money into people’s bank accounts. But that’s the thing that got us inflation in the first place,” said Zug.
Zug said the Federal Reserve is largely shielded from politician and presidential pressure. Trump has been critical of Federal Reserve Chairman Jerome Powell in the past.
During a news conference this week in Washington, D.C., Powell was asked whether he would resign from his position if asked by Trump.
“No,” Powell said.
When asked whether Trump could fire or demote him, Powell said, “Not permitted under the law.”
Given Trump’s opposition to some decisions by the Fed, he could try to boot Powell.
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