President Trump intensified his attacks on the Federal Reserve on Wednesday, accusing the central bank of hindering economic growth at a time when the White House is increasingly concerned about a potential downturn.
In tweets, Trump blamed Federal Reserve Board Chair Jerome H. Powell for the slowdown in economic growth, saying his administration is “doing great” with China and other trade deals.
He renewed his calls on Fed officials to slash interest rates to boost the economy. “The only problem we have is Jay Powell and the Fed,” Trump wrote on Twitter.
Many economists say the country is not in a recession but agree the economy is growing more slowly as business investments decline, the manufacturing industry struggles and stock markets react to uncertainty over trade policy.
Trump compared the U.S. economy to Germany and other countries in Europe where interest rates are near zero or in negative territory. “We are competing with many countries that have a far lower interest rate, and we should be lower than them,” he wrote.
Trump said this week that the White House was considering a temporary payroll tax cut and other tax changes amid worries about a potential downturn, which could hurt his chances during the 2020 presidential election. The discussions indicated Trump was considering steps that would typically be reserved for moments when the economy is in a deep downturn. On Wednesday, he reversed himself, saying he was no longer considering the tax cut.
Federal Reserve officials cut interest rates in July for the first time in a decade, and investors widely expect the Fed to lower the benchmark rate again in September. Investors will scrutinize the minutes from last month’s meeting, which will be released Wednesday at 2 p.m., for more hints on how Fed officials view the economy and what steps they think are needed now.
Federal Reserve officials are examining their options for extending the recovery at a time when interest rates are historically low, limiting the bandwidth of their conventional methods for boosting the economy. The Fed cut the benchmark interest rate to just below 2.25 percent from about 2.5 percent in July. (Typically, the Fed will try to boost the economy by lowering rates to encourage businesses and consumers to borrow and spend.)
Trump repeatedly criticized the Fed for raising rates last year. On Monday, he called on the central bank to lower rates “by at least 100 basis points,” which would bring the benchmark rate down to 1.25 percent. Trump also asked the Fed to introduce more “quantitative easing,” a measure Fed officials take to pump more money into the economy and lower rates by purchasing more bonds.
Powell and other Fed officials are considering further rate drops, but say their decision will be driven by economic data. Officials have to balance their directive to prop up the labor market and control inflation while protecting the independence of the agency. Four former Fed chairs, including Paul Volcker, Alan Greenspan, Ben Bernanke and Janet L. Yellen, joined forces in an op-ed stressing the importance of a central bank that is able to act independently and “free of short-term political pressures.”