President Trump wants the Fed to lower interest rates at a time when he may be sizing up his 2 latest picks for Fed governor as successors to Chairman Powell.
If the Fed “knew what it was doing” it would cut rates, President Trump told reporters before he boarded Air Force One back to DC after a weekend of golf.
Fed policy is putting the US at a disadvantage versus Europe and suppressing gains in the stock market, President Trump said.
Sunday’s comments came after President Trump said Friday that the central bank “doesn’t have a clue” and is “our most difficult problem.”
This criticism is consistent with ideas that the President is laying the groundwork to replace chairman Powell when the chairman’s term is up in Y 2022, assuming President Trump is re-elected, or will attempt to do so earlier if the Fed does not bend to his wishes sooner rather than later.
“Our most difficult problem is not our competitors, it is the Federal Reserve,” President Trump said in a Twitter post late Friday. The Fed had “raised rates too soon, too often” and “doesn’t have a clue,” he said.
President Trump repeatedly accuses Mr. Powell of not doing enough to bolster the economy.
This week President Trump nominated economists Judy Shelton and Christopher Waller to seats on the Fed’s board of governors. While their backgrounds are divergent, both are thought likely to enthusiastically support the President’s call for lower interest rates.
Either may be in line for the Fed’s Top job once Mr. Powell’s term as Chairman expires or even before.
Last month President Trump denied that he threatened to demote Mr. Powell back to a board governor, his term on the board runs until Y2028 — but said he’d “be able to do that if I wanted.”
The Federal Reserve Act says governors may be “removed for cause” by the President, which generally has been taken to mean inefficiency, neglect of duty or malfeasance. President Trump’s regular assertions of policy missteps is a way to build a case for neglect of duty.
The latest comments by President Trump came after the government said June growth in payrolls smashed expectations and overturned ideas that the central bank was almost certain to cut rates at its 30-31 July meeting, as the President has urged.
Growth “would be like a rocket ship” if the Fed eased, President Trump told reporters at the White House Friday.
President Trump has spent almost a year criticizing Mr. Powell and the Fed for raising rates in Y 2018 and failing to reverse course since then. He first said in July 2018 that he was “not thrilled” with the Fed’s actions, and the criticisms have only ratcheted up since then.
Mr. Powell, who has said uncertainties in the US outlook could call for lower rates, will give his read on the economy in 2 days of semiannual testimony before Congress starting Wednesday.
Policymakers at the FOMC meeting this month will discuss whether the US needs an “insurance cut” amid a slowing global economy, trade frictions and low inflation.
Making and keeping America Great!
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