President Donald Trump on Tuesday renewed his call for the Federal Reserve to lower interest rates, saying it would allow the United States to pay off debt.
“The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard. We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!” Trump wrote in a tweet.
The national debt has swelled during the Trump administration to $23.2 trillion, an increase of 16.4%, CNBC explained.
Meanwhile, an annual congressional report says the U.S. budget deficit is likely to burst through the symbolic $1 trillion barrier this year despite a healthy economy, the Associated Press reported.
Tuesday's Congressional Budget Office report follows a burst of new spending last year and the repeal in December of several taxes used to help finance the Affordable Care Act. Those have combined to deepen the government's deficit spiral well on into the future, with trillion-dollar deficits likely for as far as the eye can see.
The Fed's first policy meeting of the year is scheduled to start later in the day, where it is widely expected to keep the benchmark interest rates unchanged.
Powell has been relentlessly criticized by Trump for not cutting interest rates more aggressively or using the central bank’s balance sheet to weaken the dollar and aid his trade war.
The attacks surfaced publicly in 2018 when the Fed was still raising rates. Trump has kept them up through 2019 even as the central bank cut borrowing costs three times to offset slowing global growth and weaker investment stemming from uncertainty over trade.
Powell has avoided direct comment but has repeatedly stressed the importance of the Fed’s independence from political pressure and its commitment to transparency and accountability to Congress.
Here’s a time line of key events and Trump comments:
Less than an hour after Fed officials begin a two-day policy meeting, Trump takes to calls for a cut in rates. “The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard,” he says in a tweet. “We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!”
Dec. 17, 2019
Trump tweets it “would be sooo great if the Fed would further lower interest rates and quantitative ease. The Dollar is very strong against other currencies and there is almost no inflation. This is the time to do it. Exports would zoom!”
The Fed leaves interest rates unchanged. Powell says current policy will remain appropriate until the Fed sees a “material” change in their outlook for the U.S. economy.
Trump again blames the Fed for the strength of the U.S. currency, tweeting “Manufacturers are being held back by the strong Dollar, which is being propped up by the ridiculous policies of the Federal Reserve - Which has called interest rates and quantitative tightening wrong from the first days of Jay Powell!”
Powell meets with Trump and Treasury Secretary Steven Mnuchin in the White House residence at the president’s request to discuss the economy. The Fed releases a statement saying Powell’s comments int he meeting were “consistent with his remarks at his congressional hearings last week.”
Trump later tweets that he “protested” with Powell over U.S. interest rates that he considers too high relative to those in other developed countries.
In a speech before the Economic Club of New York, Trump says the Fed is hurting the U.S. by not lowering interest rates further and by not copying other central banks in deploying negative interest rates.
“We are actively competing with nations who openly cut interest rates,” he says. “Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it.”
Trump says Americans are “very disappointed in Jay Powell and the Federal Reserve” a day after the Fed cuts rates.
“The Fed has called it wrong from the beginning, too fast, too slow,” he tweets. “Others are running circles around them and laughing all the way to the bank.”
The Fed lowers interest rates by a quarter percentage point and signals it will keep policy on hold until it sees a “material” change in the outlook for the U.S. economy.
Less than a week ahead of a Fed policy meeting, Trump tweets that the central bank is “derelict in its duties if it doesn’t lower the Rate and even, ideally, stimulate.” He adds, “Fed was way too fast to raise, and way too slow to cut!”
The president, in an Oval Office meeting with the press, claims the Fed is “not in step with the rest of the world” and should lower interest rates. He points to sovereign bond rates being lower in Germany than in the U.S.
“We’re higher than other nations,” he says. “Germany is loaning money, and when it has to be paid back, they get paid. Ok. It’s ridiculous.”
Trump blames the Fed for hurting manufacturing companies after the Institute for Supply Management’s factory index fell to its lowest level since June 2009 -- a drop attributed in large part by economists to the president’s trade wars.
“As I predicted, Jay Powell and the Federal Reserve have allowed the dollar to get so strong, especially relative to ALL other currencies, that our manufacturers are being negatively affected,” Trump tweeted. “Fed Rate too high. They are their own worst enemies, they don’t have a clue. Pathetic!”
The Fed lowers interest rates by a quarter percentage point.
Trump focuses on foreign exchange rates as justification for attacking the Fed. In a tweet he claims China has devalued its currency and provided monetary stimulus. “Federal Reserve not watching? Will Fed ever get into the game? Dollar strongest EVER! Really bad for exports. No Inflation...Highest Interest Rates..”
He adds in a second tweet, “The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries. They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue.”
The president takes aim at the Fed over the gap between benchmark interest rates in the U.S. and Europe after the European Central Bank cut rates and pledged more large-scale asset purchases aimed at reviving growth in the eurozone. Trump claims in a tweet that the ECB is “depreciating the euro” and hurting U.S. exporters. “the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!”
“The Federal Reserve should get our interest rates down to ZERO, or less,” Trump tweets, claiming the U.S. could “refinance” its debt at lower rates.
In a second post, Trump adds, “It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of ‘Boneheads.’”
Trump takes another swipe at the central bank, tweeting, “If the Fed would lower rates to where the bond market says they should be, then I really wouldn’t worry about a recession.”
In a series of tweets, the president blasts the Fed for doing “NOTHING!” about a strengthening U.S. dollar, saying that it hurts American exporters. He also claims, “We don’t have a tariff problem (we are reigning in bad and/or unfair players), we have a Fed problem. They don’t have a clue!”
Trump adds that “badly run and weak companies are smartly blaming these small tariffs” for their woes.
“Our Federal Reserve cannot ‘mentally’ keep up with the competition -- other countries. At the G-7 in France, all of the other leaders were giddy about how low their interest costs have gone,” he tweets.
In a tweet, Trump says the Fed “loves watching our manufacturers struggle,” suggesting the central bank could offset the negative impact of his trade war on the U.S. economy by cutting rates more aggressively. “Our Fed has been calling it wrong for too long.”
During a speech in Jackson Hole, Wyoming, Powell signals the central bank will probably cut rates in September. Unsatisfied, Trump declares in a tweet, “The Fed did NOTHING!” He then asks, “Who is our bigger enemy, Jay Powell or Chairman Xi?” referring to China’s president.
The president turns Germany’s sale of negative-yield 30-year bonds into a criticism of the Fed, appearing to claim that the move gives Germany’s economic a competitive advantage.
“Germany sells 30 year bonds offering negative yields,” Trump tweeted. “Germany competes with the USA. Our Federal Reserve does not allow us to do what we must do. They put us at a disadvantage against our competition.”
Trump repeats his call for a 100 basis-point Fed rate cut and a resumption of bond purchases, saying in a tweet “If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!” He criticized “the horrendous lack of vision by Jay Powell” and also resumed complaints about the U.S. currency’s strength: “Our dollar is so strong that it is sadly hurting other parts of the world.”
Trump tweets “China is not our problem, though Hong Kong is not helping. Our problem is with the Fed. Raised too much & too fast. Now too slow to cut” during a day that U.S. stocks fell 3% on fears the U.S.-China trade war would tip the economy into recession. He called Powell “clueless.”
The president says he’s not thrilled by the “very strong dollar ” and blamed the central bank for the currency’s performance: “The Fed’s high interest rate level, in comparison to other countries, is keeping the dollar high, making it more difficult for our great manufacturers.”
The Fed cuts rates by a quarter percentage point, the first drop in rates in a decade, and announces it will stop shrinking its balance sheet on Aug. 1, two months ahead of schedule.
On the same morning Fed officials begin a two-day policy meeting, Trump tells reporters he wants a “large cut” from the central bank, adding his demand that the Fed halt balance sheet runoffs immediately. “I’m just very disappointed in the Fed,” he said.
Trump assails central banks in the E.U. and China for easing policy, using that as grounds to attack the Fed. “In the meantime, and with very low inflation, our Fed does nothing -- and probably will do very little by comparison. Too bad!” he says in a tweet.
The president tweets that 2.1% GDP growth in the second quarter is “not bad considering we have the very heavy weight of the Federal Reserve anchor wrapped around our neck.”
Trump urges the central bank to cut rates aggressively. “It is far more costly for the Federal Reserve to cut deeper if the economy actually does, in the future, turn down!” he tweeted. “Very inexpensive, in fact productive, to move now. The Fed raised & tightened far too much & too fast. In other words, they missed it (Big!). Don’t miss it again!”
Trump fired off multiple Fed-related tweets. “Because of the faulty thought process we have going for us at the Federal Reserve, we pay much higher interest rates than countries that are no match for us economically,” he said. “In other words, our interest costs are much higher than other countries, when they should be lower. Correct!”
Trump also reacted to speech delivered the prior day by New York Fed President John Williams. The speech initially gave the impression Williams favored cutting rates by a half-point, but the New York Fed later released a statement emphasizing the remarks were made in an “academic speech’ and “not about potential policy actions.”
Trump tweeted: “I like New York Fed President John Williams first statement much better than his second.”
“Our most difficult problem is not our competitors, it is the Federal Reserve,” Trump said in a late-night Twitter post. The Fed “raised rates too soon, too often,” and “doesn’t have a clue!” the president said.
The U.S. economy would grow more quickly if monetary policy were eased, Trump tells reporters. “If we had a Fed that would lower interest rates, we would be like a rocket ship,” he says. “We don’t have a Fed that knows what they’re doing.”
Trump says the U.S. would be better off if Mario Draghi, president of the European Central Bank, were in charge of U.S. monetary policy instead of Powell.
Trump accuses the Fed of behaving like a “stubborn child” in refusing to cut interest rates as he attacks the central bank again for keeping credit too tight.
Trumps denies having threatened to demote Powell but insists he has the authority to do so, in an interview with NBC’s “Meet the Press.” Trump repeated his criticism that the Fed was wrong to raise rates as much as it did in 2018.
Trump says he expects Powell will “eventually” cut interest rates, after again suggesting he could remove the central bank chief.
“He should have done it sooner,” Trump said. His comment came a day after the Fed ended a two-day policy meeting with a statement suggesting greater uncertainty in the economy could lead to a rate cut. “Can’t win it all. Eventually he’ll do what’s right,” Trump said.
Fed officials leave interest rates unchanged, but signal they may cut rates as early as July because of rising uncertainties around their economic outlook, linked to weakening inflation and the impact of ongoing trade disputes.
At a post-meeting press conference, Powell says, “I have a four-year term, and I fully intend to serve it.”
Bloomberg News reports the White House explored the legality of stripping Powell of his chairmanship and demoting him to a Fed governor. Trump’s top economic adviser, Larry Kudlow, subsequently says such a move isn’t under consideration.
Asked the same day whether he still wants to demote Powell, Trump tells reporters: “Well, let’s see what he does.”
In an interview with ABC News, Trump says the rate of economic growth in the U.S. would be “at least a point and a half higher” if the Fed had not raised interest rates so much in 2018.
Asked about Powell, Trump says: “He’s my pick -- and I disagree with him entirely.”
The president tweets: “The Fed interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” Trump also notes the U.S. has “VERY LOW INFLATION,” calling it a “beautiful thing!”
Trump complains in an interview on CNBC Television that the Fed doesn’t listen to him, contrasting that with the control China’s leader wields over that country’s central bank.
“They devalue their currency. They have for years. It’s put them at a tremendous advantage,” Trump said of the Chinese. “We don’t have that advantage because we have a Fed that doesn’t lower interest rates.”
Trump says Fed should help offset damage to U.S. economy being caused by tariffs to “match” stimulus efforts taken by China’s government.
“China will be pumping money into their system and probably reducing interest rates,” the president tweeted. “If the Federal Reserve ever did a ‘match,’ it would be game over, we win!”
Fed leaves interest rates unchanged.
Trump calls for a drastic cut in interest rates to boost the already-healthy U.S. economy. “Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low,” he says in a tweet. In a subsequent post, he adds the economy could soar “like a rocket” if the Fed lowered its benchmark rate by a full percentage point and resumed bond purchases.
With the Commerce Department reporting that first-quarter GDP grew at an annualized pace of 3.2%, the president says the figure would have been higher if not for the Fed. “If we kept the same interest rates and the same quantitative easing that the previous administration had, that 3.2 would have been much higher.”
Trump tweets: “If the Fed had done its job properly, which it has not, the Stock Market would have been up 5,000 to 10,000 additional points, and GDP would have been well over 4% instead of 3%.”
The same evening Powell reassured Democratic lawmakers he would not give in to political pressure, he received an unscheduled phone call from the president. The Fed released no details of the conversation other than to say it lasted five minutes.
Following a roundtable meeting in San Antonio, Texas, the president says his supporters would prefer a Fed chair who doesn’t raise interest rates.
Trump tells reporters the Fed should cut interest rates. “I think they really slowed us down. There’s no inflation.”
He adds that instead of reducing the size of their balance sheet, Fed officials should also be buying additional securities as a way to boost the economy. If the Fed followed his advice, “you would see a rocket ship,” he says.
Trump tweets: “Despite the unnecessary and destructive actions taken by the Fed, the economy is looking very strong.”
Trumps tweets that the U.S. economy “would be in a better place” if the central bank “not mistakenly raised interest rates, especially since there is very little inflation.” The posting followed comments the same day from White House economic adviser Larry Kudlow calling on the Fed to “immediately” cut rates by half a percentage point.
Trump tells tells Fox Business Network the U.S. economy would have grown faster if the Fed hadn’t raised interest rates. “Hopefully now we won’t do the tightening,” he said.
Fed leaves interest rates unchanged.
Powell receives a phone call from Trump the same day concerns about the U.S. jobs market helped send stocks to their biggest weekly drop of the year.
In a wide-ranging speech at the Conservative Political Action Conference, Trump took a swipe at Powell without naming him. After saying the U.S. dollar was too strong, Trump referred to “a gentleman that likes raising interest rates in the Fed, we have a gentleman that loves quantitative tightening in the Fed, we have a gentleman that likes a very strong dollar in the Fed.”
Trump hosts Powell, Fed Vice Chairman Richard Clarida and Treasury Secretary Steven Mnuchin for dinner at the White House to discuss the U.S. economy. Immediately following the gathering, the Fed releases a statement saying Powell “did not discuss his expectations for monetary policy” with the president.
Fed leaves interest rates unchanged.
Dec. 25, 2018
In Christmas Day remarks to reporters at the White House, Trump responds to a question about Powell: “Well, we’ll see. They’re raising interest rates too fast. That’s my opinion. But I certainly have confidence. But I think it will straighten. They’re raising interest rates too fast because they think the economy is so good. But I think that they will get it pretty soon.”
Dec. 24, 2018
“The only problem our economy has is the Fed,” Trump tweets. “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!”
Dec. 23, 2018
Mick Mulvaney, Trump’s pick for the next White House chief of staff, says he’d spoken to Treasury Secretary Steven Mnuchin and that Trump “now realizes he does not have the ability” to fire a Fed chairman.
Dec. 22, 2018
Mnuchin, in a posting on Twitter, quotes Trump as telling him, “I never suggested firing Chairman Jay Powell, nor do I believe I have the right to do so.”
Dec. 21, 2018
Bloomberg News reports that Trump has discussed firing Powell as his frustration intensified following the most recent interest-rate hike and months of stock-market losses.
Dec. 19, 2018
The Fed raises interest rates by a quarter percentage point.
Dec. 17, 2018
“It is incredible,” Trump tweets, “that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!”
Dec. 11, 2018
Trump tells Reuters “I think it would be foolish” for the Fed to raise interest rates. “But what can I say?” he says. “You have to understand, we’re fighting some trade battles and we’re winning. But I need accommodation too.”
He calls Powell a “good man,” but adds that “he’s trying to do what he thinks is best. I disagree with him I think he’s being too aggressive, far too aggressive, actually far too aggressive.”
Nov. 27, 2018
Trump tells the Washington Post he’s “not even a little bit happy with my selection of Jay.” On what threatens the U.S. economy, Trump adds, “I think the Fed is a much bigger problem than China.”
“I’m doing deals and I’m not being accommodated by the Fed,” the president says. “They’re making a mistake because I have a gut and my gut tells me more sometimes than anybody else’s brain can ever tell me.”
Nov. 26, 2018
In an interview with the Wall Street Journal, Trump says “I think the Fed right now is a much bigger problem than China. I think it’s -- I think it’s incorrect what they’re doing. I don’t like what they’re doing. I don’t like the $50 billion. I don’t like what they’re doing in terms of interest rates. And they’re not being accommodative at all. And I’m doing trade deals, and they’re great trade deals, but the Fed is not helping.”
Nov. 20, 2018
The president tells reporters that the central bank is a “problem” and that he would “like to see the Fed with a lower interest rate.”
Oct. 23, 2018
The president tells The Wall Street Journal he “maybe” regrets appointing Powell to head the Fed. He declines to say what circumstances would cause him to want to remove Powell, but adds, “I’m not going to fire him.”
Trump says he was intentionally sending a direct message to Powell that he wanted lower interest rates, even as he acknowledges that the central bank is an independent entity.
Oct. 16, 2018
In a Fox Business Network interview, Trump calls the Fed his “biggest threat,” again criticizing the central bank for endangering economic growth through interest-rate hikes. Trump says the central bank is “independent so I don’t speak to them, but I’m not happy with what he’s doing because it’s going too fast.”
Oct. 10, 2018
Trump slams Fed policy during a campaign rally in Pennsylvania, complaining “they’re so tight. I think the Fed has gone crazy.” He later says during a telephone interview on Fox News that the central bank was “going loco” for raising rates.
Sept. 26, 2018
The Fed raises interest rates by a quarter percentage point.
“We are doing great as a country,” Trump says at a press conference in New York. “Unfortunately they just raised interest rates a little bit because we are doing so well. I am not happy about that.”
Aug. 30, 2018
“We are not being accommodated,” Trump says in an interview with Bloomberg News in the Oval Office. “I don’t like that.”
“That being said,” he continues, “I’m not sure the currency should be controlled by a politician.” He also says he doesn’t regret appointing Powell.
Aug. 20, 2018
In private remarks at a fund-raiser on Long Island Trump says he expected Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors that his nominee instead had raised interest rates, according to three people present.
July 20, 2018
Trump turns to social media to take another shot at the Fed. “China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day -- taking away our big competitive edge,” Trump tweets. “The United States should not be penalized because we are doing so well.”
July 19, 2018
The president makes his first critical remarks about the Fed. “I’m not thrilled” the central bank is raising borrowing costs and potentially slowing the economy, he says in an interview with CNBC. “I don’t like all of this work that we’re putting into the economy and then I see rates going up.”
June 13, 2018
The Fed raises rates by a quarter point.
March 21, 2018
The Fed raises rates by a quarter point.
Dec. 13, 2017
The Fed raises rates by a quarter point.
Nov. 2, 2017
At the Rose Garden ceremony marking his nomination by Trump to the chairmanship, Powell is careful to slip into his remarks a reference to the Fed’s independence: “I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence.” Trump says he picked Powell because, “He’s strong. He’s committed. He’s smart.”
Material from Bloomberg and Reuters has been used in this report.
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