Harris says she would never interfere in Fed independence
Kamala Harris poses for a picture with a supporter at a campaign event in Las Vegas, Nevada. Reuters
Harris’s view contrasts sharply with that of the Republican nominee and former president, who on Thursday said that US presidents should have a say over the Fed’s decisions.
“The Fed is an independent entity and as president I would never interfere in the decisions that the Fed makes,” Harris, the Democratic presidential nominee, told reporters in Phoenix, Arizona.
Harris, speaking before flying to Las Vegas for a campaign rally, said she planned to unveil policy positions next week.
“It’ll be focused on the economy and what we need to do to bring down costs, and also strengthen the economy overall,” she said.
A jump in the July US unemployment rate reported last week helped to spark a global stock market rout that continued into Monday before equities made a partial recovery. Investors had taken flight because of fears of a potential US recession and that the Fed would need to act aggressively in response.
Asked about those concerns and how the Fed would react, Harris said: “As we know, there was turbulence this week, but it seems to have settled itself. And we’ll see what... decisions they make next.” Trump’s comments on Thursday offered the most explicit indication so far of his interest in infringing on the Fed’s independence should he regain the White House.
“I feel the president should have at least (a) say” on Fed decisions, Trump told reporters at his Mar-a-Lago residence in Florida.
His comment followed a Wall Street Journal report this spring that said Trump allies have drafted proposals that would attempt to erode the central bank’s independence if he wins.
While the Trump campaign distanced itself from the report at the time, his latest remarks indicate that he is squarely aligned with one of the main thrusts of the proposals; that the president should be consulted on interest rate decisions and that Fed banking regulation proposals should be subject to White House review.
Current Fed Chair Jerome Powell, who was appointed by Trump and reappointed by President Joe Biden, is due to serve until May 2026.
Trump repeatedly criticized and commented on the Fed while he was in office, a departure from the practice of other US presidents.
Kamala Harris told supporters in Nevada on Saturday she supported eliminating taxes on tips, taking a similar position to her rival Donald Trump in an effort to win over service workers, an important constituency in the state.
“It is my promise to everyone here when I am president we will continue to fight for working families, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said.
Harris said she would work to drive down consumer prices, vowing to “take on big corporations that engage in illegal price-gouging” - corporate landlords that unfairly raise rents on working families - and big pharmaceutical companies to lower drug prices.
Inflation still high: US inflation remains “uncomfortably” above the Federal Reserve’s target despite the progress it has made in recent months, a senior bank official said Saturday.
The US central bank has held interest rates at a two-decade high for the past year as it battles to return inflation to its long-term target of two per cent following a pandemic-era surge in prices.
The Fed’s favored inflation gauge now sits at an annual rate of just 2.5 per cent -- well below the peak reached in 2022 -- while the US economy is still growing and the labour market has weakened somewhat.
Against this backdrop, Fed chair Jerome Powell suggested in late July that the bank could move ahead with its first interest rate cut as soon as September -- if economic data continues to come in as expected.
But some Fed officials have been more cautious about signaling rate cuts than others.
“The progress in lowering inflation during May and June is a welcome development,” Fed governor Michelle Bowman told a conference in Colorado Springs, according to prepared remarks. “But inflation is still uncomfortably above the committee’s two per cent goal.” Despite “upside risks,” Bowman said she still expects inflation to ease in the coming months, but warned policymakers to remain patient “and avoid undermining continued progress on lowering inflation by overreacting to a single data point.” “I will remain cautious in my approach to considering adjustments to the current stance of policy,” she added.
The remarks from Bowman, who is a permanent voting member of the Fed’s rate-setting committee, suggest she remains concerned about cutting interest rates too soon -- despite overwhelming support for a September rate cut in the financial markets.
