This week, Donald Trump, the President of the United States, threw a big public meeting. … and almost immediately after that, having met with Jerome Powell, the new Chair of Federal Reserve, in the newly renovated Federal Reserve building. This convening proved to be a historic one. That was the first time a sitting president visited the Federal Reserve since George W. Bush’s attendance at Ben Bernanke’s swearing-in in 2006. This $2.5 billion renovation project has completely transformed the Fed’s facilities, and it’s highlighted these impressive upgrades that are supposed to increase operational efficiency.
While on site, Trump and Powell toured the recently renovated facilities together. They took great pride in showing off the impressive work that’s been done over those years. The meeting was marred by deepening animosity between the two men, most notably over Fed policy. Trump has publicly criticized Powell and the Federal Reserve for maintaining higher interest rates, which he believes hinder economic growth. This criticism started even before the summit and has been the key dividing line in their rocky romance.
That public disagreement over the future path of interest rates has made for some vivid headlines in recent months. Indeed, at every turn, Trump has pressured the Federal Reserve to lower interest rates. He argues that this step would increase economic activity and be a win-win for American businesses and consumers. Powell and the Fed have made up their minds — and there’s no turning back — on not raising rates. Most importantly, they are acting in response to burdensome inflation and working to stabilize the economy.
The tour of the Federal Reserve’s renovations provided a backdrop for what many observers viewed as an awkward exchange between Trump and Powell. In the course of their conversations, Trump mused that he wanted Powell to cut interest rates. This frank admission elicited a variety of responses from attendees. These interactions showed why the personal dynamics were at play. It illustrated their extremely different views on monetary policy and its broader impact.
It’s what this meeting represents that is more important than the multi-million dollar renovations or the playful exchanges between the two leaders. It’s a cautionary tale about the problematic relationship between the nation’s central bank and the executive branch of government. In recent history, such interactions have been unusual, particularly considering the Federal Reserve’s independence to set monetary policy.