Trump Says He ‘Made A Lot Of Money’ So He Should Have A Say In When You Get A Rate Cut

Throughout his presidency, Donald Trump attempted to pressure the Federal Reserve to decrease interest rates, a breach of procedure that undermined the central bank’s independence and ability to keep jobs growing and inflation low. If reelected, Trump indicated Thursday he would go even further, attempting to exert direct control over monetary policy.

“The president should have at least some say in this. “I feel that strongly,” Trump stated near the end of his press conference. “I earned a lot of money. I was quite successful. And I believe I have a greater instinct than many people who would serve on the Federal Reserve — including the chairman.”

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Trump Says He ‘Made A Lot Of Money’ So He Should Have A Say In When You Get A Rate Cut

The former president claimed that Fed Chair Jerome Powell, whom Trump chose in 2017, had consistently mistimed rate hikes.

“He tends to be late with things. “He gets a little too early and too late,” Trump stated. “I believe it’s a gut feeling.”

Trump looked to be joining a growing chorus of economists and market participants who believe Powell and the Fed erred last week when they chose not to lower interest rates from a 23-year high at the end of their decision meeting on July 31. Two days later, the US Bureau of Labour Statistics revealed that the US economy added a disappointing 114,000 jobs while the unemployment rate rose to 4.3%.

That worse-than-expected jobs report threw the stock market into a frenzy, fuelling concerns that the Fed delayed too long to decrease interest rates. It takes time for rate hikes or cuts to take effect on the economy, so timing a policy move correctly is a difficult game that the Fed has historically struggled to master.

Still, Trump has recently pushed against a rate cut before the election, claiming that such a decision by the Fed would be a gift to the Democratic Party. Rate cuts typically lower borrowing costs for households and businesses, freeing up cash to spend and stimulating the economy. In its years-long struggle against rising inflation, the Fed raised interest rates to slow the economy and keep prices under control. It has met that purpose.

Trump has publicly feuded with Powell for years, repeatedly tweeting on social media that he disagreed with the Fed’s decision to raise interest rates during Powell’s pre-Covid rate-hiking campaign.

“I had it out with him a couple of times very strongly,” Trump stated Thursday. “I fought him quite hard. And we get along just great.”

Trump publicly complimented Powell for lowering interest rates to zero in March 2020, when the Fed implemented two unusual emergency rate cuts to keep the economy from collapsing in the epidemic’s early stages.

Presidents routinely criticize Federal Reserve policy, but Trump’s public pressure campaign stands out. The Fed is intended to be an independent governing body free of political influence so that it cannot be coerced into making emotional judgments that could disrupt the delicate balance of job growth and lower inflation. A central bank is often obliged to make uncomfortable decisions, and when politics enters the picture, as it has recently in Turkey, inflation can spiral out of control, and economies can collapse.

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Trump Says He ‘Made A Lot Of Money’ So He Should Have A Say In When You Get A Rate Cut

Despite their tight relationship, Powell has consistently declined to comment on Trump’s attempts to seize power, stating that the Fed will remain independent and unwavering in its purpose.

In a Bloomberg interview last month, Trump stated that if reelected, he would not fire Powell, “especially if I thought he was doing the right thing.” However, Trump has stated that Powell will not be reappointed when his term expires in 2026.

SOURCE | CNN