Former President Donald Trump took his attacks on the Federal Reserve to a new level. He aimed especially at Chair Jerome Powell and the central bank’s Board of Governors in his blistering recent statement. Trump is escalating his campaign for rate cuts. He cites a plethora of reasons why the status quo rates are doing economic damage to the U.S. economy.
In his critique, Trump highlighted that the United States currently has one of the highest interest rates among global central banks. He didn’t mention it, but his calcs implied that the U.S. should be paying “1% Interest, or less!” This statement is a metaphorical shot across the bow at the Fed’s current loosy-goosey monetary policy and its reported affect on the cost of federal debt payments.
Trump has apparently been gunning for Powell for a long while. This hatred goes back to his presidency when he appointed Powell in 2018. His criticism centers on Powell’s reluctance to lower borrowing costs to a level that meets Trump’s approval. The former president has previously labeled Powell a “fool,” a “numbskull,” and a “stupid person,” illustrating the depth of his discontent.
In a recent handwritten note, Trump accused Powell of having “cost the USA a fortune.” He went on to double down on his assertion that the central bank has “definitely” not been doing its job. He noted that the federal government is getting killed on interest rate payments. This is a direct result of the Fed’s inability to reduce short-term rates.
“The Board just sits there and watches, so they are equally to blame. We should be paying 1% Interest, or better!” – Trump
For all of Trump’s blistering criticism, Jerome Powell has not publicly retaliated against the president’s frequent insults. Above all, he continues to argue, the Fed’s central responsibility is to make sure inflation stays in check. He dials in on the need to prioritize a well-functioning labor market. According to Powell, the Fed intends to observe how recent policy shifts influence the economy before considering any further rate adjustments.
To be sure, Trump’s critiques speak to deeper frustrations with huge shifts in policy since his departure from the White House. His recent comments make clear that he’s frustrated. He argues that the Fed has made a serious mistake by not responding appropriately to the current economic contraction.