The Federal Reserve and the White House have been at odds for decades, years and many critics see little or not reason for the central bank to remain independent.
“The independent Federal Reserve has always been a problem for the White House,” Mr, Laffer told reporters on TV. “I do not see any reason why we should have an independent Federal Reserve to be honest. We should not have an independent military board either to make decisions. I do not think that we should have tax laws determined by a group of professors either. You know, it doesn’t make any sense. But it has been going on.”
President Trump has been slamming Fed Chairman Powell for the board’s refusal to cut interest rates, but Mr. Laffer said Monday he thinks the rates will eventually come down.
Their job is not to bait the President,” he said. “Their job is to do a good job. With interest rates falling, I would expect the Fed to follow suit and lower interest rates as well. They have been doing it historically.”
Historically, the Fed has followed the markets, but has not dropped the rates yet, and that is because it is “taking the bait” and “being obstinate, stubborn.”
“That has always been the case,” said Mr. Laffer. “This is not new.”
Over the weekend, President Trump slammed the Fed and Powell, saying if the Fed “knew what it was doing” it would cut interest rates. He added that the Fed’s policy is suppressing stock market gains and putting the United States at a disadvantage with Europe.