Apparently unsatisfied that he’s made his point, Donald Trump went after Jerome Powell again, less than a week ahead of a crucial Fed meeting where, thanks in no small part to trade tensions, the FOMC will be forced to tip imminent rate cuts or risk disappointing market expectations.
“[Jerome Powell] is my pick — and I disagree with him entirely”, Trump told ABC’s George Stephanopoulos, while driving around in the backseat of a car. “Frankly, if we had a different person in the Federal Reserve that wouldn’t have raised interest rates so much we would have been at least a point and a half higher”, the president continued, repeating a familiar talking point that lays the groundwork for scapegoating the Fed when the US economy doesn’t perform as Trump promised it would.
Here is the clip which, again, is somewhat bizarre – Stephanopoulos is huddled up next to the president and it almost seems as though Trump, nostalgic for his days as a New York real estate mogul, was trying to recreate the feel of an 80s-style, on-the-move interview in Manhattan.
This is (at least) the third time this week Trump has assailed the central bank. On Monday, during a wild call-in interview with CNBC, the president suggested the US would be better off if the country was more like China, where President Xi “does whatever he wants” vis-à-vis the central bank.
“Don’t forget that in China, the head of the Fed is President Xi”, Trump said. “He can do whatever he wants.”
Later, Trump used a Bloomberg article about overtourism in Europe as an excuse to lambast Powell. “The Fed Interest rate is way to high, added to ridiculous quantitative tightening!”, the president shrieked, misspelling “to”, on the way to exclaiming that “They don’t have a clue!”
Again, the timing of these attacks isn’t a coincidence. Between the trade war, sluggish inflation and signs that the US economy is cooling, rate cut bets have proliferated and multiple Wall Street desks have adopted Fed easing as their base case.
Ideally, Trump would like the Fed to either cut rates or pre-commit to a July cut at next week’s meeting. That would give him some leverage headed into an expected sit-down with Xi at the G-20.
The Fed, meanwhile, is facing an impossible quandary: Cut rates to save the global economy from Trump at the possible expense of losing their independence, or watch the world burn in an effort to preserve the integrity of the most critical institution on the planet.