In direct statements via the "Truth Social" platform, U.S. President Donald Trump set a strict condition for the appointment of the next Federal Reserve Chair, which is complete approval of his economic vision, and he threatened to exclude anyone who disagrees with him.
The essence of the "Trump Rule" on interest policy
Trump clearly defined his economic philosophy, which can be informally summarized as the "Trump Rule," which opposes the conventional principle of the Federal Reserve. He stated: "I want the new Federal Reserve Chair to lower interest rates if the market is doing well, not to destroy the market for no reason at all."
Trump believes that the current approach of the central bank hinders growth, as rising markets now bring concerns about raising interest rates to combat inflation, which stifles recovery. He emphasized that "strong markets do not cause inflation; rather, bad policies do," believing that addressing inflation can be postponed if necessary, not during periods of rising markets.
Kevin Hassett: The leading candidate supporting swift cuts
It seems that Kevin Hassett, the director of the National Economic Council and a potential leading candidate for the position of Federal Reserve Chairman, is completely aligned with Trump's vision. He stated to CNBC that the Federal Reserve "is moving too slowly" in lowering interest rates, and that the United States is lagging behind other global central banks in this regard.
Hassett provided justifications for this position, pointing out that:
· Advances in artificial intelligence boost productivity and keep inflation pressures low.
· The tariffs imposed by the Trump administration contributed approximately 1.5% to the GDP growth of 4.3% in the third quarter.
The broader context and reactions
These statements come at a sensitive time, as:
· The Federal Reserve lowered interest rates for the third time this year on December 10, but indicated the possibility of slowing the pace of future cuts.
· The recent decision saw the highest number of opposing votes (3 governors) since 2019, with current chairman Jerome Powell stating it was a "difficult decision."
· The prospect of Hassett's nomination, as Powell's term ends in May, raises concerns among some observers about the central bank's closeness to the White House, although Hassett himself has affirmed that the Federal Reserve's independence is "really important."
On the other hand, a recent poll showed that Trump's economic approval rating stands at 37%, which Hassett commented on by saying that public opinion often lags behind actual economic performance. Trump is expected to announce his candidate for the position of Federal Reserve Chairman soon, confirming that it will be someone who "strongly supports lowering interest rates."