Trump launches new broadside against the Fed: ‘I’m very unhappy’
For the third week in a row, President Donald Trump is criticizing Jerome Powell, the man he picked to lead the Federal Reserve.
In an interview Tuesday with The Wall Street Journal, Trump said that Powell raises interest rates “every time we do something great.”
The Fed chair “almost looks like he’s happy raising interest rates,” the president said. He also told the newspaper that it was “too early to tell, but maybe” he regretted nominating Powell to the position.
The criticism echoes comments Trump made last week in an interview with Fox Business in which he said that the Fed is his “biggest threat.”
Michelle Smith, a spokeswoman for the Fed, declined to comment on Trump’s remarks Tuesday.
Presidents have for decades refrained from commenting on the Fed, a stance adopted to avoid compromising its independence — and its credibility with financial markets.
In the run-up to the midterms, Trump has pitched voters on his stewardship of the economy. He threw Washington into a frenzy this week by promising to introduce a fresh round of tax cuts before the midterms, expanding on last year’s landmark tax reform.
But the president has lately expressed frustration with the Fed’s gradual interest rate increases, designed to slow down the economy and prevent inflation from taking off — standard macroeconomic steps that Trump insists are undercutting his expansionary fiscal moves.
Earlier this month, as investors dumped stocks amid concerns over rising interest rates, Trump said the central bank was “going loco” and “out of control.”
Trump complained to the Journal on Tuesday that former President Barack Obama — who came into office amid the worst recession in decades — didn’t have to deal with the burden of rising interest rates.
“I’m just saying this: I’m very unhappy with the Fed because Obama had zero interest rates,” Trump told the paper.
After the financial crisis erupted in 2008, the Fed kept rates at historically low levels to revive the ailing economy. It started slowly raising rates again in 2015 as the economy regained strength under Obama, and has hiked them six times since Trump took office. Three of those increases were under Powell, a sitting Fed governor widely respected on Wall Street whom Trump chose to succeed Obama’s pick, Janet Yellen.
Before he picked Powell, however, Trump teased the possibility of renominating Yellen, crediting her with helping boost the stock market.
As with other personnel changes, the president made his Fed pick something of a reality show, asking Fox anchor Lou Dobbs for his recommendation in a televised interview. (Dobbs endorsed Yellen.)
Yellen says Fed criticism is unwise
Economists have generally given Powell high marks on his performance, arguing the Fed is acting wisely by gradually returning monetary policy to normal levels after the worst recession in 75 years.
The central bank is trying to cool down the red-hot economy after Washington’s debt-fueled tax cuts and spending surge. The rate hikes are also designed to give it room to provide support for the economy whenever the next downturn arrives. That’s especially important because the federal government’s soaring budget deficit could make it harder to borrow to fight a recession.
Yellen defended his performance in remarks last week at a mortgage bankers conference in Washington and suggested Trump should back off.
“I really think it is not a desirable thing for a president to comment so explicitly on Fed policy,” she said. “Obviously, presidents can speak out if they choose to and give their opinions about policy, there’s no law against that, but I don’t think it’s wise and I do think the Fed has a strong reputation for acting in an independent and non-political way and I would not like to see that reputation damaged.”
That view was repeated the same week by Trump’s former top economic adviser Gary Cohn — who was also once considered a candidate to chair the Fed under Trump.
When asked on CNBC if he thought the president should be weighing in, Cohn replied: “I don’t think he should be making comments on any federal agency.”