President Donald Trump on June 24 renewed his criticism of the Federal Reserve, saying that the economy—which just had “one of the best months of June in US history”—could perform even better if the central bank didn’t increase borrowing rates.
“Despite a Federal Reserve that doesn’t know what it is doing – raised rates far too fast (very low inflation, other parts of world slowing, lowering & easing) & did large scale tightening, $50 Billion/month, we are on course to have one of the best Months of June in US history,” Trump wrote on Twitter.
“Think of what it could have been if the Fed had gotten it right. Thousands of points higher on the Dow, and GDP in the 4’s or even 5’s. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us. Blew it!” he added.
The president has repeatedly blamed the Fed for undermining his efforts to boost the economy and demanded that the central bank undo a series of rate hikes.
The Federal Reserve signaled June 19 that it may cut interest rates as early as July to address growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation. That indication came one day before Iran downed a U.S. drone in the Strait of Hormuz, adding to simmering tensions between Washington and Tehran.
Fed Chairman Jerome Powell said on June 19 that even policymakers who didn’t envision a rate cut this year now believe “that the case for a somewhat more accommodative policy has strengthened.” The baseline outlook remains “favorable,” he said, and “there was not much support for cutting rates now at this meeting.”
The Fed raised rates several times after Trump took office after keeping them at virtually zero throughout the presidency of Barack Obama. The president began criticizing the central bank in July last year. He has since referred to the Fed as the biggest factor working against the U.S. economy and “a much bigger problem than China.”
“The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch – he can’t putt!” Trump wrote late last year.
Powell has refused to comment on the president’s criticism and regularly reasserts the independence of the Fed.
“My duty is one that Congress has given us, which is to use our tools to achieve maximum employment and stable prices and to supervise and regulate banks so that they treat their customers fairly and so that they’re strong, well-capitalized, and can perform their critical function in good times and bad,” Powell told CBS’s “60 Minutes” in March. “That’s my job.”
Trump appointees hold the majority on the Federal Reserve’s board of governors. Trump appointed the chairman, Jerome Powell, and three other members: Michelle Bowman, Randal Quarles, and Richard Clarida. Only one current member of the board, Lael Brainard, is an Obama appointee.
Two slots of the board of governors remain vacant after two of Trump’s appointees, Herman Cain and Stephen Moore, withdrew from the nomination process. Moore, Cain, and Trump have all voiced support for moving away from the Fed’s fiat currency monetary system. All three have said that the gold standard—where the value of the dollar is backed by gold reserves—is a superior system.
Congress created the Federal Reserve in 1913 with the goal of preventing the “boom and bust” economic cycle. In the decades since its creation, the central bank has failed to fulfill the goal and instead contributed to the boom and bust cycle it was established to prevent.
Reuters contributed to this report.