They say the presidency has a steep learning curve, and President Donald Trump has not been exempt from this rule. Especially when it comes to monetary policy. "I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me," Trump told the Wall Street Journal in an interview last week. 

Trump has gone back and forth on many things. Firstly, China, which the president labeled the "grand champion" of currency manipulation and vowed to classify as a currency manipulator on day one of his administration. After meeting with China President Xi last week, Trump withdrew the criticism and asserted things had changed. Then there's NATO. After calling the military alliance obsolete throughout his campaign, Trump is now saying NATO is essential for global security and that the U.S. strongly supports it. 

But Trump's back-and-forth approach to policy has never flip-flopped more than his views on interest rates and the Federal Reserve Chair Janet Yellen. When asked in the interview with the WSJ last Wednesday if Yellen was "toast" when her term was up, Trump has some kind words for the incumbent. "No, not toast, I like her, I respect her," Trump said. (See also: How Trump’s Dollar Bashing May Hurt the Economy)

However, throughout his campaign and into his presidency Trump has changed his view of Yellen and interest rate policy on multiple occasions. 

Trump's Malleable Views on Rates

Long before he was accusing Barack Obama of wiretapping Trump Tower, he was accusing the prior president of manipulating the Fed and keeping interest rates suppressed. "Janet Yellen should have raised the rates. She’s not doing it because the Obama administration and the president doesn’t want her to," Trump said in 2015. Trump for higher rates.

Early in his campaign, Trump's interest rate policy was in sync with Yellen, adding she was a very capable person. "She’s a low-interest-rate person, she’s always been a low-interest-rate person. And I must be honest, I’m a low-interest-rate person," Trump told CNBC in 2015. A week later, Trump doubled down on his low rate policy, saying higher rates would be a disaster for the economy. Trump for lower rates.

Then he hit the campaign trail, where he told his voters (predominantly middle- and lower-middle class) that the Fed's low interest rate policy had lead to vast inequality, leaving many in the middle class behind. While campaigning in Ohio, Trump said the Fed's low interest policy had created a "false economy." He said monetary policy needed to change, to provide a true reflection of asset prices. "At some point, the rates are going to have to change. The only thing that is strong is the artificial stock market," Trump said at a rally in Ohio. Trump for higher rates.

A week later, Trump continued his criticism for low interest rate policy, this time arguing that the real victims of interest rates at record low levels were those who have "saved their money all their lives and thought they would live off their interests." In the same interview with CNBC, Trump added that the debt level was not sustainable, something that was not consistent with his fiscal policy spending plans. Trump for higher rates. (See also: Breaking down Trumponomics)

In the interview with the WSJ last Wednesday, Trump said he was in favor of low interest rates, probably to keep the U.S. dollar down as it rises with his own popularity. Trump for lower rates.

As for the market, traders see the probability of the Fed increasing the fed funds rate at its July meeting around 46 percent. 

The Fate of Janet Yellen

At the end of the day, President Trump's monetary policy will be formed by his appointments to the Federal Reserve. Much like his view on interest rates, Trump has gone back and forth on the current Fed Chair. On multiple occasions, Trump has said he has great respect for Yellen, but then there's the time he said she should be "ashamed" of her low interest rate policy. (See also: How Trump Could Quickly Shake Up the Fed)

Whatever his view on rates and the Fed, it is very likely Trump will replace Yellen and Vice Chair Stanley Fischer when their terms expire in 2018. The Republicans have been critical of the current FOMC's monetary policy stance and its policy on managing the balance sheet. (See also: How Will the Fed Reduce its Balance Sheet?)

If the Republicans do usher in a new era of policy makers, it would likely be a more hawkish FOMC, one where the balance sheet is more actively managed and where securities are reduced at a faster pace, ironically leading to higher interest rates, which he is not in favor of. Or is he?

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.