The Fight to Protect the Fed From Trump’s Rate-Hike Barbs

On July 19, Donald Trump broke with decades of presidential precedent when, in a television interview with CNBC at the White House, he openly criticized the Federal Reserve for raising interest rates, saying he was “not thrilled” by the policies of his newly appointed Fed chairman, Jerome Powell. That same day, Powell was making the rounds on Capitol Hill, visiting the offices of two Democratic lawmakers, Senator Ron Wyden of Oregon and Representative Michael Capuano of Massachusetts. Powell was fulfilling a promise he’d made in an interview just a few days before on the radio show Marketplace that he was “going to wear the carpets of Capitol Hill out by walking those halls and meeting with members.”

So when Trump fired a warning shot across his bow, the Hill was a fitting place to be. Cultivating Congress, paradoxically, is a cornerstone of Powell’s strategy to protect the Fed’s freedom to conduct monetary policy without political interference. Economists say that independence, granted to the bank by lawmakers, is key to any modern economy’s success. It wouldn’t be the last Trump thump: A month later the president complained to donors in the Hamptons that Powell was not the cheap-money central banker he would have liked.