As inflation remains a central concern for American households and businesses alike, questions about who controls borrowing costs have come sharply into focus. Chief among them: Can the President of the United States lower interest rates?

The short answer is no. The long answer is more nuanced—and politically charged.

The Fed’s Mandate and Independence

In the United States, interest rate policy falls squarely within the domain of the Federal Reserve, the central bank tasked with maintaining price stability and maximum employment. Through tools like the federal funds rate, the Fed controls short-term interest rates, which ripple across the economy, affecting everything from credit card APRs to 30-year mortgage rates.

Crucially, the Fed operates independently of the White House. This autonomy is designed to insulate monetary policy from political pressure—ensuring decisions are based on economic data rather than election cycles or approval ratings.

Federal Reserve Chair Jerome Powell, for instance, has made clear that the central bank’s decisions are guided by inflation dynamics, labor market strength, and financial stability—not by commentary from elected officials.

Where the President Fits In

While the president cannot dictate interest rate decisions, the executive branch still holds significant indirect influence over the Fed and broader economic conditions.

1. Appointments to the Federal Reserve Board

Perhaps the most direct lever is the power of appointment. The president nominates members to the Board of Governors of the Federal Reserve, including the chair and vice chair. These nominations must be confirmed by the Senate, but over time they shape the ideological and analytical makeup of the central bank.

For example, President Joe Biden nominated Jerome Powell—a Republican originally appointed by Donald Trump—for a second term, while also appointing Lael Brainard, a noted dove on interest rates, as vice chair before she left for the White House’s National Economic Council.

These personnel decisions do not guarantee specific policy outcomes, but they influence the Fed’s collective approach to inflation, labor markets, and financial regulation.

2. Fiscal Policy as a Counterweight

Beyond personnel, presidents wield influence through fiscal policy—government spending and tax initiatives that directly impact economic growth. Stimulus packages, tax cuts, infrastructure bills, and social programs can either boost demand (potentially adding inflationary pressure) or rein it in.

For instance, the trillions of dollars in pandemic-related stimulus passed under both the Trump and Biden administrations significantly increased consumer demand, arguably contributing to the inflation surge that the Fed is now trying to tame with higher interest rates.

3. Shaping the Narrative

Presidents also shape public perception and market sentiment. From Lyndon B. Johnson to Donald Trump, presidents have not shied away from publicly criticizing the Fed, despite its independence. While such statements don’t alter policy directly, they can affect investor expectations, which in turn influence financial conditions.

In 2019, President Trump repeatedly urged Powell to lower interest rates, calling the Fed “crazy” and “out of touch.” Powell, however, insisted the Fed would remain data-driven and apolitical—a stance that has remained largely intact, even as inflation reached four-decade highs in 2022.

Interest rates are the Fed’s domain—not the President’s. Yet, through appointments, fiscal policy, and public positioning, the White House still plays a meaningful role in shaping the economic environment the Fed must navigate.

Understanding this delicate dance between fiscal and monetary power is essential—not just for economists and policymakers, but for investors, businesses, and everyday Americans who feel the impact of every quarter-point rate hike or cut.