A top economic adviser to President Donald Trump said the administration is not trying to damage the independence of the Federal Reserve by appointing two of Trump’s close political allies to the Fed board.
Larry Kudlow, head of the president’s National Economic Council, said in an interview on the Fox Business Network that the administration is allowed to put people at the central bank who share the president’s views on the economy.
Kudlow was responding to criticism after Trump’s announcements that he plans to nominate conservative political allies — former Trump campaign adviser Stephen Moore and former 2012 GOP presidential candidate Herman Cain — to the two vacancies on the seven-member Fed board.
Trump’s choices were seen as escalating an effort by the White House to exert political pressure on the central bank. Both choices will require Senate confirmation and already some lawmakers have expressed reservations about the two men, who are still undergoing White House background checks.
Asked if he thought the choices diminished the Fed’s independence, Kudlow said, “I don’t buy it. We’re not trying to damage the Fed’s independence.”
He indicated that Trump’s picks could bring fresh perspective to the Fed’s debates on the economy and interest rates.
“I think some of the old-school thinking and some of the old econometric models in the central bank could use a little fresh air, a little different opinion,” Kudlow said.
Kudlow said that his and the president’s calls for the Fed to cut interest rates were precautionary moves to make sure that various potential risks did not end up harming the economy after the Fed raised rates four times last year. Those rate hikes that had been criticized by Trump and his economic team.
“I’m just saying we think they went too far. A lot of market participants and investors agree with us,” Kudlow said.
Trump on Friday said if the Fed cuts rates now, the economy would take off like a “rocket ship.”
Speaking with reporters on the White House lawn, Trump said he believes the central bank “really slowed us down” with the four rate hikes last year.
Trump’s attacks on the Fed accelerated last year as the central bank raised rates.
Since January, the Fed has switched course and signaled that it does not plan to raise rates this year and also announced it will halt later this year is program to reduce its bond holdings.
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