Former President Donald J. Trump, the Republican candidate for the 2024 presidential race, promised lower interest rates — which a president does not actually control — if he is elected.
Asked on Wednesday what he would do on “Day 1” of a new presidency during a panel at the National Association of Black Journalists convention in Chicago, Mr. Trump said one priority would be to “drill, baby, drill,” the shorthand tagline he has adopted for promoting oil and gas production in the United States.
“I bring energy way down, I bring, interest rates are down, I bring inflation way down,” Mr. Trump expanded.
The president exerts no direct control over interest rates. The Federal Reserve sets a key policy rate, which then trickles out to influence borrowing costs across the economy, and the Fed is independent from the White House.
Mr. Trump has at times implied that the Fed will lower rates because inflation is likely to be lower on his watch, which could have been what he meant on Wednesday. Economists have suggested that some of his proposed policies may in fact speed up inflation.
Still, the candidate’s comments underscore how politically salient both price increases and high interest rates remain as the Nov. 5 election nears, even after years in which inflation has been gradually cooling. And they make it clear that the coming months are likely to be politically fraught for the Fed as the technocratic institution tries to stay outside the political fray.
As Mr. Trump learned during his term in office, Fed officials have proved unwilling to lower rates just because a president wants them to come down. Mr. Trump harangued the Fed chair and his colleagues on Twitter and in public forums in 2018 and 2019, but the Fed did not cut borrowing costs as much or as quickly as he wanted.
Fed officials prize their independence in part because they think that for them to succeed at their twin goals — fostering full employment and keeping inflation low — investors and households need to believe that they are setting policy with only the economy in mind.
If central bankers cut rates to help an incumbent politician, people would come to believe that they were unwilling to do what it took to control inflation. And if they came to expect more inflation, many economists think that people would change their behavior in ways that would make fast inflation more likely. Workers would ask for heftier raises to cover their costs. Restaurants and grocery stores might institute more regular price increases to cover their anticipated costs. Globally, research shows that independent central banks are more successful at controlling price expectations and inflation.
Interest rates do seem likely to drop in the months and years ahead, but for economic rather than political reasons.
After two years of first increasing interest rates and then keeping them high to fight rapid inflation, the Fed signaled on Wednesday that it is finally on the cusp of lowering borrowing costs. But officials have been adamant that the shift is coming because inflation has cooled substantially, not because they are bowing to pressure from either party.
“Anything we do before, during or after the election will be based on the data” and outlook, Jerome H. Powell, the Fed chair, said on Wednesday. “We don’t want to be involved in politics in any way.”
While Mr. Trump wants lower interest rates, he has said the Fed should not lower them before the election, implying that doing so would be a political gift to incumbent Democrats.
But policymakers are preparing to move soon because inflation is falling notably. After peaking at 9.1 percent in June 2022, the Consumer Price Index inflation measure has fallen to about 3 percent. It hovered around 2 percent in the years leading up to the 2020 pandemic.
Many economists have suggested that Mr. Trump’s policies, which include plans to raise tariffs sharply and deport immigrants, could lift prices by pushing up import costs and causing labor shortages in key industries.
But Mr. Trump has repeatedly suggested that his oil and gas policies will bring inflation down.
“We have to bring down the cost of energy, and that’s going to bring down the cost of inflation — this was all started by a bad energy policy by Joe Biden,” Mr. Trump said.
That diagnosis is not correct. Inflation took off starting in 2021 for a number of reasons: Among them, used car costs and prices on a number of other goods shot up.
That spike owed in large part to global supply chain problems. Factory shutdowns meant that semiconductors were in short supply, making it hard to build new vehicles. Plus, people were buying a lot of goods as stimulus checks hit their bank accounts, and there were not enough container ships to carry them. Key ports became clogged, and shortages hit supermarket shelves.
Inflation jumped especially swiftly in America, but countries around the world soon experienced the problem. The issue was only exacerbated in 2022, when Russia’s invasion of Ukraine did push up fuel costs as well as food prices. Gas prices are down notably from their peak that year, though they are higher than in the years leading up to the pandemic.
Economists and Fed officials think that price increases will continue to slow. If that plays out, it will be good news for Americans: No matter who wins in November, there is hope that both inflation and borrowing costs will be lower before long.
“A reduction in the policy rate could be on the table as soon as the next meeting in September,” Mr. Powell said during his news conference after the Fed’s meeting this week.