WASHINGTON: US President Donald Trump launched a second day of criticism against the Federal Reserve on Thursday, calling its interest rate increases a “ridiculous” policy that was making it more expensive for his administration to finance its escalating deficits.
“I’m paying interest at a high rate because of our Fed. And I’d like our Fed not to be so aggressive because I think they’re making a big mistake,” Trump said in a Thursday morning interview on Fox & Friends.
It was his second broadside against the US central bank in the last 24 hours, following a sell-off on Wall Street partly attributed to investors fully adjusting to the central bank’s steady rate increases, and an uptick in particular in yields on long-term US Treasury bonds that are an important, more secure alternative to stock investments. The president’s remarks were quickly qualified by National Economic Council Director Larry Kudlow, who said the Fed was “on target” in policies that were responding to a strong economy.
The rise in interest rates is “a sign of economic health, that is something to be welcome and not feared,” Kudlow said on CNBC. “The president is not dictating policy to the Fed...They are independent. They are going to do what they are going to do.”
Trump himself later told reporters he would not try to oust Powell, Trump’s handpicked successor to former Fed chair Janet Yellen, and a well-regarded insider in moderate Republican circles.
Past US presidents have criticised the central bank, but the recent run of invective was unusual even for Trump. Since the close of Wednesday’s trading session on Wall Street he has called the Fed “crazy,” “loco,” “ridiculous,” and “too cute,” while saying its rate increases are “too aggressive,” and “a big mistake.” US stocks opened lower on Thursday but seesawed between losses of as much as a percentage point and small gains.
Though the Fed has been raising its overnight target policy rate, a benchmark for lending costs overall, the current level of between 2 and 2.25 per cent remains just half the average set by the Fed between 1990 and the start of the 2007 to 2009 recession.
“The problem that I have is with the Fed. The Fed is going wild. I mean I don’t know what their problem is but they are raising interest rates and it’s ridiculous,” Trump said late on Wednesday night. “The problem in my opinion is Treasuries and the Fed. The Fed is going loco and there is no reason for them to do it and I’m not happy about it.” A Fed official said the central bank would not comment on the president’s remarks. — Reuters
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