Trump 'not happy' with Federal Reserve interest rates

Lloyd Doyle
July 20, 2018

President Donald Trump criticised the U.S. central bank in comments aired Thursday, saying its course of interest rate increases counteracted his efforts at growing the economy.

Trump, in an interview with CNBC, said he does not approve, even though he said he "put a very good man in" at the Fed in Powell.

Business media figures immediatly expressed alarm, noting that Trump was breaking presidential tradition by publicly revealing his opinion about the Federal Reserve, threatening the independence of the institution.

But Trump - in a tit-for-tat tariff war with the EU, China, Mexico and Canada - said he was anxious that the timing put the USA at a "disadvantage" while the European Central Bank and the Bank of Japan maintain loose monetary policy, the network reported. Powell was a governor on the Fed and has largely followed the path the Fed has been on for years, slowly raising interest rates as the economy strengthens, unemployment declines and inflation stirs. "But at the same time I'm letting them do what they feel is best".

The Fed has raised interest rates five times since Trump took office in January 2017, with two of those coming this year under Chairman Jerome Powell, the president's pick to replace Janet Yellen.

The Fed last month raised its policy rate for a second time this year and projected two more increases in 2018.

Doing so slows growth, as it raises the cost of borrowing, but can also prevent runaway inflation from damaging the economy.

Trump named Jerome Powell as Fed chairman earlier this year.

Before winning the White House, Trump had publicly complained for years that the Fed was too loose with the US money supply.

Mr Trump argued that higher rates put the U.S. at a disadvantage and impede faster growth.

"They're not doing what we're doing", Trump remarked, "and we already have somewhat of a disadvantage, although I'm turning that into an advantage". "I couldn't care less what they say, because my views haven't changed".

Presidents have historically avoided criticizing the Fed, which is created to be independent from political interference. But he also told CNBC during the campaign that he is a "low interest-rate-person".

In a statement to CNBC, the White House said: "Of course the President respects the independence of the Fed".

This is not the first time Trump has targeted the Fed.

Other reports by Iphone Fresh

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