US Fed like a ‘stubborn child’, says Trump
US President Donald Trump on Monday renewed his attacks on the Federal Reserve, saying the central bank’s reluctance to cut interest rates was standing in the way of blowout economic expansion.
The Fed last week left benchmark US lending rates untouched but signalled it could ease them soon if the economic outlook deteriorates.
“Despite a Federal Reserve that doesn’t know what it is doing… we are on course to have one of the best Months of June in US history,” Trump tweeted, arguing that lower rates would have driven GDP growth rates as high as five percent.
“Now they stick, like a stubborn child when we need rate cuts & easing, to make up for what other countries are doing against us. Blew it!”
Last week, Fed Chairman Jerome Powell opened the door to a rate cut, saying persistent trade friction and slowing global growth, among other factors, had “strengthened” the case for looser monetary policy.
A single member of the Fed’s rate-setting Federal Open Market Committee pushed for an immediate cut to help preserve the economic expansion.
But Powell insisted on the central bank’s political independence, brushing aside news reports that Trump had considered demoting him. He has maintained that central bankers pay no attention to political pressure.
After raising interest rates nine times since 2015, gradually emerging from a decade of ultra-low rates in the aftermath of the Great Recession, policymakers have signalled a shift in course, with their next move likely to be a cut.
Meanwhile, the US economy has given off mixed signals: Surveys of consumer confidence and business activity are running hot, unemployment is still near 50-year lows, and consumer spending has been strong in recent months.
But growth in the second quarter could be about half the pace of the first, manufacturing has continued to weaken and business investment has declined.
And Trump’s threat to jack up tariffs on another $300 billion in Chinese goods threatens to send shockwaves through the global economy.