President Trump renewed criticism of the Federal Reserve ahead of the central bank’s Federal Open Market Committee meetings Tuesday and Wednesday.
Fed Chairman Jerome Powell and his colleagues “don’t have a clue,” Trump posted on social media Monday morning. He mentioned he desires to see a “huge” drop in interest rates.
“Producer prices in China shrank most in three years because of China’s big devaluation of their currency, coupled with monetary stimulus. Federal Reserve not watching?” Trump wrote on social media. “Will Fed ever get into the game? Dollar strongest EVER! Bad for exports. No Inflation. Highest Interest Rates.” The Fed is expected to publish a rate reduce Tuesday at 2 p.m. EST after the meetings.
“The U.S., because of the Federal Reserve, is paying a Much Higher Interest Charge than other competing countries,” he continued. “They can’t imagine how lucky they’re that Jay Powell & the Fed don’t have a clue. And now, on prime of all of it, the Oil hit. Big Interest Rate Drop, Stimulus!”
Last week, Trump called for zero or negative interest rates, which the European Central Bank announced in a brand new round of stimulus.
The U.S. central bank reduced the benchmark federal funds rate in July for the first time in nearly a decade, summoning “global developments within the economic outlook as well as muted inflation pressures.” At the time, Fed officials didn’t say whether they anticipated additional cuts, however, warned it was not the origin of an aggressive rate-cutting series.
Since then, however, global economic conditions have significantly weakened: Manufacturing contracted within the U.S. for the first time in three years; the spread between two-year and 10-year Treasury yields inverted, a standard harbinger of an impending recession; and employment information within the U.S. recommended the labor market is softening, all amid heightened trade tensions between the U.S. and China.