The president of the St. Louis Federal Reserve is confident the U.S. central bank will remain free from political interference under Donald Trump’s administration. Confident enough that he even still supports an increase in benchmark interest rates by the Fed at its next meeting in December.
“President-elect Trump’s transition team has said that it wants to protect Fed independence,” James Bullard told Handelsblatt in an exclusive interview. “I take them at their word.”
President-elect Trump has criticized Fed chairwoman Janet Yellen for keeping interest rates low, claiming that she’s under pressure from the Obama administration. He threatened to fire the Fed chair during the campaign, though Ms. Yellen’s tenure at the helm of the Fed continues until at least 2018.
It’s partly because the Fed’s board is nominated that Mr. Bullard doesn’t expect too much change under the president elect. The Federal Reserve’s policy committee consists of a dozen people, Mr. Bullard said, and Donald Trump will only fill a few seats.
“He would only gradually be able to put his stamp on the institution,” Mr. Bullard said. “I think you’ll have a lot of continuity in policy making in the meantime.”
For Mr. Bullard, that’s a good thing. History has shown what happens when politicians get too involved in monetary policy.
“I think very few people want to go to a Venezuelan- or Argentinian-style policy,” he said.
Below is a Q&A with the St. Louis Fed chair. The interview was edited for length and clarity and is not a full transcript.
Handelsblatt: Mr. Bullard, before the U.S. election, the Fed was heading for a rate hike in December. Is that still the plan or has the election of Donald Trump changed everything?