Lawmakers are ‘demeaning their role’ by trying to influence the Fed, House finance chair says

Rep. Patrick McHenry (R–N.C.) sharply criticized other politicians on Tuesday for making public comments about what the Federal Reserve should do with its interest rate policy.

McHenry,the outgoing chair of the House Financial Services Committee, said it was an ‘”outrage” that some politicians are publicly lobbying the central bank about rate cuts.

“The outrage to me is … for instance, if you’re on the right, you say the Fed should be independent, except I think right now they should do this. And on the left, the same,” said McHenry, who is retiring from Congress at the end of this term.

“Senators that are trying to direct the Fed on rate policy are really demeaning their role. …. They’re demeaning their role as a United States Senator,” he added.

McHenry’s comments came one day before the U.S. central bank is widely expected to start cutting interest rates for the first time since 2020. Coming in the middle of a presidential election cycle, the change in Fed policy has stirred speculation as to whether the central bank would be influenced by political considerations. Chair Jerome Powell, first appointed by Trump and reappointed by President Joe Biden, has repeatedly denied that’s a factor.

On Monday, Democratic senators Elizabeth Warren of Massachusetts, John Hickenlooper of Colorado and Sheldon Whitehouse of Rhode Island called for the Fed to cut its benchmark lending rate by 0.75 percentage points, which is higher than the most aggressive market expectations. Warren and Whitehouse are both running for re-election in November while Hickenlooper’s term ends in 2026.

Republicans who have weighed in include former President Donald Trump, who said in an August press conference that he believes he should get a say on monetary policy if he wins in November. Sen. Mike Lee (R–Utah) also introduced a bill earlier this year that would abolish the Fed.

When asked about Trump’s remarks, McHenry said that “all presidents think they should give an input” but that the central bankers should ignore statements from politicians.

“The Fed should act in the way that the data indicates that they should act. Period,” McHenry said.

The remarks came at a conference hosted by Georgetown University’s Psaros Center for Financial Markets and Policy.