Elon Musk supports the contentious idea that US presidents should have a say in Federal Reserve policy. This endorsement came after President-elect Donald Trump hinted at a potential shift in the Fed's independence.

Musk's statement is part of a movement questioning the central bank's autonomy as Trump sets the stage for a possible overhaul of Fed interactions with the executive branch, CNBC reported.

Presidential Influence Over the Fed

The billionaire behind Tesla and SpaceX openly supported the notion that presidents should be able to intervene in the central bank's decision-making process following Trump's recent election win.

Musk's endorsement now hints at a potential clash between the new administration and the Federal Reserve, which has historically maintained a strict separation from political influence.

Throughout his 2024 campaign, Trump frequently hinted at wanting a say in Fed policies. He reportedly argued that his financial success and business instincts qualify him to make better decisions than the Federal Reserve chair, Jerome Powell. This stance aligns with Trump's previous criticisms during his first term, where he openly disagreed with Powell's policy decisions.

However, Federal Reserve Chair Jerome Powell is standing firm. In response to questions about his position, Powell made it clear that he would not step down if Trump requested his resignation, CNBC reported.

Fed Chair's Response

Powell's stance reflects the broader tradition of Fed independence. The central bank's mandate is to make decisions based on economic indicators rather than political pressures. By keeping monetary policy decisions separate from executive influence, the Fed has, in the past, aimed to ensure long-term economic stability and be free from short-term political agendas.

Historically, Fed independence has been seen as crucial for making unbiased economic decisions. However, with growing political interest in direct control over monetary policy, this principle faces renewed scrutiny.

In the run-up to the US presidential election, Musk's $1 million-a-day voter giveaway, hosted through his America PAC, caused legal and political debates. However, despite accusations brought by Philadelphia's District Attorney of attempting to influence voter behavior, a court in Pennsylvania allowed the contest to go on in swing states.

Philadelphia District Attorney Larry Krasner, a Democrat, filed for an injunction to stop the giveaways, calling them a “scam” designed to sway votes in favor of Republican candidate Donald Trump. The sweepstakes targeted voters in important battleground states.