Trump clashes with Federal Reserve, underscoring limits of presidential power

Donald Trump has once again put the spotlight on the boundaries of presidential power by publicly criticising the Federal Reserve and its approach to interest rate policy. The renewed rhetoric has revived a familiar debate in Washington over how much influence the White House can exert over independent institutions.

Trump has argued that interest rates should be lower to support economic growth and ease pressure on public finances. However, the Federal Reserve operates under a mandate set by Congress, with decisions on monetary policy taken independently of the executive branch. The central bank’s autonomy is widely seen as a safeguard against short-term political interference that could undermine inflation control and financial stability.

The dispute contrasts with areas where presidential authority is more direct. Trump has taken a notably hands-on role in federal property management, showing strong interest in construction, renovation, and the symbolism of government buildings. Through executive agencies, the White House can shape infrastructure priorities and the administration of federal assets, reinforcing Trump’s self-styled image as a decisive “builder”.

Economists note that this distinction is crucial. While presidents can influence fiscal policy and administrative decisions, they cannot set interest rates. Persistent public pressure on the Fed may raise concerns in financial markets, particularly if it creates uncertainty about the central bank’s independence or future policy direction.

The episode reflects a broader tension within the US system of governance. Strong checks and balances are designed to separate political leadership from technical economic decision-making. As Trump continues to test these institutional boundaries, the clash serves as a reminder that the power of the presidency, though extensive, remains constrained when it comes to core monetary policy.