Trump slams Fed's rate policy despite strong economy

Marco Green
July 20, 2018

But as Trump said to CNBC on Thursday, most people would probably advise a sitting president not to comment on monetary policy as the independence of the Federal Reserve is at the heart of the market's faith in the world's preeminent central bank.

"I don't like all of this work that we're putting into the economy and then I see rates going up", he added.

Mr Trump has said before that he favours low interest rates, and dismissed concerns about his interference.

This was not the first time Trump departed from a long-standing practice by USA presidents of respecting the Federal Reserve's independence by refraining from commenting on interest rates or the value of the USA dollar, a custom he dismissed.

A weekly recap of the top political stories from The Globe, sent right to your email.

Trump indeed said he had 'put a very good man in, ' in reference to Powell, who succeeded Janet Yellen at the Fed. That episode ultimately triggered runaway inflation that took a decade to tame and required raising the Fed's policy rate above 15 percent - more than eight times the rate's current average.

The Fed is now chaired by Trump appointee Jerome Powell, whom Trump described as 'a very good man'. During the interview, Trump himself predicted the response: "Now I'm just saying the same thing that I would have said as a private citizen", he said.

Outside of his comments on the Fed, Trump touted the rising us dollar as superior to the euro and China's renminbi, which are dropping.

President Donald Trump, surrounded by workers, holds up an Executive Order that establishes a National Council for the American Worker after signing it during a ceremony in the East Room of the White House, Thursday, July 19, 2018, in Washington.

"So somebody would say, 'Oh, maybe you shouldn't say that as president.' I couldn't care less what they say because my views haven't changed", he told CNBC.

Mr Trump has taken credit for robust USA economic performance since his election and championed December's sweeping tax cuts. US stock prices also briefly pared losses after news of his remarks.

Trump's remarks immediately raised questions about Trump's commitment to the Fed's political independence, a key pillar of the central bank's function.

Fed spokeswoman Michelle Smith declined to comment. Subtracting inflation, the rate is slightly negative in real terms and still "accommodative" for growth and borrowing, as the Fed said in its June statement.

Most Fed policymakers see the US job market as close to full strength, while inflation has recently risen to the Fed's 2 percent target. But the past three administrations under Bill Clinton, George W. Bush and Barack Obama have refrained from publicly commenting on policy decisions.

The White House later clarified Trump's statements. In emerging markets such as Turkey, the government of President Recep Tayyip Erdogan has felt no such restraint. Given Trump's recent Fed picks, this doesn't appear to be the case.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER