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Donald Trump has stepped up the pressure on the Federal Reserve to cut interest rates with his most personal attack yet on Jerome Powell, the man he handpicked to run the US central bank.
Ahead of a crucial speech by Powell in Jackson Hole on Friday, the US president compared the Fed chairman to a golfer who was unable to putt and said he had let the country down.
Shares on Wall Street rose at the start of the day in expectation that Powell would signal his readiness to reduce the cost of borrowing in the coming months. The Fed’s independence is supposed to be guaranteed, but the financial markets are confident it will cut interest rates at each of its next three meetings.
Trump has been using his Twitter account in recent days to fend off accusations from the Democrats that the US is heading for a recession. He has also insisted that the world’s biggest economy would be doing even better but for Powell’s mistakes.
He tweeted:
Donald J. Trump
(@realDonaldTrump)Doing great with China and other Trade Deals. The only problem we have is Jay Powell and the Fed. He’s like a golfer who can’t putt, has no touch. Big U.S. growth if he does the right thing, BIG CUT – but don’t count on him! So far he has called it wrong, and only let us down….
Donald J. Trump
(@realDonaldTrump)…..We are competing with many countries that have a far lower interest rate, and we should be lower than them. Yesterday, “highest Dollar in U.S.History.” No inflation. Wake up Federal Reserve. Such growth potential, almost like never before!
Despite the strongest growth among the G7 industrial nations and the lowest unemployment for 50 years, the Fed cut interest rates by a quarter-point last month to a range of 2%-2.25% as an insurance policy against weaker activity in the future.
Trump, however, believes Powell has been timid in his approach and cited Germany’s decision to float a 30-year bond paying no interest to investors as an example of how the Fed’s monetary policy was holding the US back.
The German bond auction proved to be something of a flop, raising only €824m (£770m) of the €2bn offered to the market. Some investors were deterred by the prospect of getting back less than they paid in 30 years’ time once inflation was taken into account.
Trump tweeted:
Donald J. Trump
(@realDonaldTrump)So Germany is paying Zero interest and is actually being paid to borrow money, while the U.S., a far stronger and more important credit, is paying interest and just stopped (I hope!) Quantitative Tightening. Strongest Dollar in History, very tough on exports. No Inflation!…..
Donald J. Trump
(@realDonaldTrump)….WHERE IS THE FEDERAL RESERVE?
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