Trump says Fed ‘out of control’ but won’t fire Powell
US President Donald Trump blames the Federal Reserve for global stocks declining amid concerns about rising interest rates (SAUL LOEB)
Washington (AFP) – President Donald Trump renewed his attacks on the US central bank on Thursday, saying it was “out of control” in raising interest rates but saying he had no plans to dismiss Federal Reserve Chairman Jerome Powell.
With global stocks declining for the second day amid concerns about rising interest rates, Trump blamed the Federal Reserve.
“It is a correction that I think it is caused by the Federal Reserve, with interest rates,” Trump told reporters at the White House. “I think the Fed is out of control.”
However, asked about Powell’s future, Trump said, “I’m not going to fire him.”
Trump named Powell to lead the central bank but can only fire him for cause.
Earlier in the day, Trump told the Fox & Friends television broadcast that the central bank was “making a big mistake.”
And while he acknowledged higher rates helped savers, he criticized the Federal Reserve’s tactics as “too aggressive.”
The comments followed his strongest criticism late Wednesday when he said the Fed had “gone crazy” and blamed the interest rate increases for the stock selloff, which caused the Dow Jones Industrial Average to lose more than 800 points in its worst tumble since February.
The rout caused a domino effect worldwide, with losses spreading to Asia and Europe as investors remained concerned about rising rates — which would send more buyers out of equities and into bonds — as well as the impact of Trump’s trade conflict with China on corporate profits.
Wall Street was on a roller coaster ride Thursday, losing more than one percent on the Dow and S&P, but then recovering slightly. London lost nearly two percent, Frankfurt fell 1.5 percent, and Tokyo plunged nearly four percent.
White House economic adviser Larry Kudlow on Thursday said Trump’s opinions had no weight on the Fed’s actions.
“We know the Fed is independent. The president is not dictating policy to the Fed. He didn’t say anything remotely like that,” he said on CNBC.
Kudlow said the Fed was managing “the transition from ultra, ultra easy money … to something more normal,” by raising rates gradually.
Trump has repeatedly touted the spate of Wall Street records as proof of the success of his economic program, including his confrontational trade strategy, and criticized the Fed for raising the benchmark interest rate — three times this year — saying it would undermine his efforts.
– ‘Do the right thing’ –
In fact it is largely his policies that are behind the changes: tax cuts and increased government spending are expected to juice the economy, adding to the Fed’s justification to raise interest rates.
Meanwhile, trade conflicts raise costs for companies, which could hit the bottom line in quarterly earnings — something analysts said had helped prompt Wednesday’s sell-off.
The attacks on the Fed are another example of Trump breaking with recent norms. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.
Powell has brushed off the comments, saying officials do not pay attention to politics.
“This is just who we are and I think who we will always be, which is, we’re a group who — we’re quite removed from the political process,” Powell said in a recent interview.
“And we just try to do the right thing for the medium and longer term for the country.”
International Monetary Fund chief Christine Lagarde also defended the Fed on Thursday.
Raising interest rates was justified “for those economies that are showing much improved growth, inflation that is picking up … unemployment that is extremely low,” Lagarde told a press briefing in Bali, Indonesia where the IMF is holding its annual meeting.
Disclaimer: This story has not been edited by Siliconeer and is published from a syndicated feed. Siliconeer does not assume any liability for the above story. Validity of the above story is for 7 Days from original date of publishing. Content copyright AFP.