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That may influence which products we write about, but it does not affect what we write about them. Here's an explanation of how we make money and our Advertiser Disclosure.Ivana Pino · Senior WriterUpdated Tue, Aug 26, 2025 6 min readFollowing a series of cuts to the federal funds rate in late 2024, the Federal Reserve has since held its target rate steady despite pressure to make additional cuts in 2025.Fed officials are adopting a cautious approach amid economic uncertainties, especially the impact of recent tariffs imposed by the Trump administration. They've emphasized the need for patience, suggesting that any rate changes should await clearer economic data.However, President Trump has been vocal in his opposition to the Fed's decisions, to say the least. He described Fed Chair Jerome Powell as a "stubborn moron" after the Fed kept interest rates steady, urging for immediate cuts and suggesting the Fed board override Powell.And on Monday, Trump took things even further, stating in a letter (which was subsequently shared on social media) that he removed Federal Reserve Governor Lisa Cook from her post — a move that critics say is illegal.So, how much influence does the sitting president really have over Fed leadership and its monetary policy decisions? Here’s what you need to know.Read more: 5 ways to tariff-proof your financesThis embedded content is not available in your region.The Federal Reserve doesn’t directly control interest rates set by individual financial institutions. The Federal Open Market Committee (FOMC) — the division of the Fed responsible for setting monetary policy — controls the federal funds rate. That’s the short-term interest rate that depository institutions charge each other to borrow money overnight.Learn more: Federal funds rate: What it is and how it affects youWhen the FOMC raises or lowers its target rate, banks typically follow suit. Rising rates generally make it more expensive for consumers to borrow money, but it also means they’ll earn higher rates on savings accounts, certificates of deposit (CDs), and money market accounts. Conversely, lowering rates decreases short-term interest rates on credit products and deposit accounts.Here’s a look at how rates have changed since 2022:U.S. presidents don’t have authority over the Fed, but they do have certain powers that can impact the future of the Fed and its decisions.The chair of the Board of Governors of the Federal Reserve System leads the Fed in working toward its key goals, including maximum employment, stable prices, and moderate long-term interest rates. Some of the Fed chair’s responsibilities include reporting to Congress on the Fed's monetary policy objectives, testifying before Congress, and meeting periodically with the Treasury Secretary.According to the Federal Reserve Act, the chair and vice chair of the board are appointed by the president but must be confirmed by the Senate. Fed chairs and vice chairs serve four-year terms and can be reappointed by the sitting president. They can also be ousted by a sitting president, although this has never happened.The president also nominates the seven members of the Board of Governors who serve on the FOMC and oversee the 12 Reserve Banks. Each member is appointed for up to 14 years, which is considered a full term, after which they can’t be reappointed.Again, the president also has the ability to remove a governor from their seat. According to the Federal Reserve Act, governors can be removed by the President “for cause,” which is generally understood to mean serious misconduct or inability to perform the job — not simply policy disagreements. Until now, no Fed governor has been removed by a president.In his letter, Trump accused Cook of mortgage fraud, citing this as justification for firing her. The matter was referred to the Justice Department for investigation, though Cook has not been officially charged with any crime.In a statement released by her attorney, Abbe Lowell, Cook said she would not step down, explaining that President Trump does not have cause and therefore, no authority to remove her. Lowell said Tuesday they would be filing a lawsuit to challenge what they called an "illegal action."Though presidents can’t control interest rates directly, they can discuss their stance on current monetary policy and its impact on rates. But this can be a touchy topic.“Institutionally, the Federal Reserve is very protective of its independence because that independence helps it achieve its mandate,” said Scott Fulford, a senior economist at the Consumer Financial Protection Bureau. “Most presidential administrations go out of their way to avoid even publicly commenting on Fed policy.”Even so, that hasn’t stopped our current president from expressing his views on the Fed and its decisions.For example, earlier this year, Trump posted on social media that Powell's termination as Fed chair "cannot come fast enough" and referred to him as "a major loser."Experts maintain that the Fed will continue to make decisions independently. Still, this outside commentary can lead to campaign promises and political actions that impact inflation and consumer prices in other ways, according to Fulford.“For example, this administration has focused on resolving supply chain problems and reducing monopoly rent-seeking, which reduces inflation,” Fulford said. “Congress could raise taxes or spend less, which would also affect inflation.” He added that there are many policies that affect the broader cost of borrowing as well, such as reducing late fees or closing costs.Bottom line: The Fed is designed to operate independently of politics, but public statements by the president can shape market expectations and potentially influence the Fed's policy decisions indirectly.Up NextWhen is the Fed's next meeting?Fed rate decision: How it affects your bank accounts, loans, credit cards, and investmentsJobs, inflation, and the Fed: How they're all relatedBanks and credit unions can adjust their rates at any time at their discretion. You can’t control how rates change, but you can implement smart savings strategies to ride out interest rate fluctuations:Consider a high-yield savings account. These savings accounts offer higher interest rates compared to traditional savings accounts. When interest rates fluctuate, you can be sure you’re still earning a competitive rate compared to the market average with a high-yield account.Start now. Compound interest helps your savings grow exponentially over time. The earlier you begin saving, the more your balance will grow. Plus, you’ll have a head start if rates fall in the future.Shop around. Whether you’re looking to open a new savings account or reevaluate the one you currently have, regularly reviewing the best savings rates available can ensure you’re not missing out on better opportunities.Lock in your rate. If you think rates may fall soon, putting your money in a CD allows you to lock in competitive rates for the next several months or even years. Keep in mind that CDs require you to keep your money on deposit until the maturity date, otherwise you’ll be subject to an early withdrawal penalty.Up NextWhen is the Fed's next meeting?Fed rate decision: How it affects your bank accounts, loans, credit cards, and investmentsJobs, inflation, and the Fed: How they're all related