“At the President’s invitation”, a notice posted to the Fed’s website documenting a Monday morning meeting between Jerome Powell and Donald Trump reads.
It might as well say “Chair Powell was summoned” or “sent for”, as “Lefty Guns” would put it.
The sitdown at the White House (which also included Steve Mnuchin) came less than a week after Trump lambasted the Powell Fed during a free-wheeling address to the Economic Club of New York.
In addition to accusing Powell of being far too slow to cut rates, Trump told the audience the Fed has put the US at a disadvantage versus other countries and insisted that policy rates in America should be the lowest in the world. That, of course, would mean the Fed adopting negative rates, something nobody other than Trump supports.
It wasn’t the first time Trump has called on Powell to get rates below zero. In September, he demanded as much, and called the central bank a gang of “boneheads”.
According to the Fed’s account of Monday’s meeting, Trump and Powell discussed the economy, growth, employment and inflation.
Powell didn’t deviate from what he’s said in public, the notice reads.
“Chair Powell’s comments were consistent with his remarks at his congressional hearings last week”, the Fed insists, adding that “he did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy”.
He may have said that (and good for him if he did), but the fact that he was forced to reiterate it in person, at the White House, after having repeated it ad nauseam should be cause for alarm, especially when you consider that Powell has arguably not adhered to strict data dependence this year when cutting rates three times despite the US economy holding up reasonably well.
Each rate cut has been accompanied by dissents from Esther George and Eric Rosengren, underscoring the extent to which easing policy in the current environment is by no means the kind of no-brainer that Trump claims it should be.
In short, monetary policy has already been overtly politicized by Trump, and everyone knows the pressure on Powell will be ratcheted up headed into the election.
“Finally, Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis”, the Fed emphasized.
Again, it’s disconcerting that the Fed has to say that so explicitly, and although one would certainly expect the meeting to be made public by the Fed, it’s notable that at least as of Sunday evening, it wasn’t on Trump’s schedule. That suggests the president would have been just fine with it if the pow wow had been kept from the public.
“Just finished a very good [and] cordial meeting at the White House with Jay Powell of the Federal Reserve”, Trump tweeted. “Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength [and] its effect on manufacturing, trade with China, EU [and] others”.
What can you say? At least Jay made it out alive.
“You don’t wanna go? I’ll turn around.” “What are you gonna do, take a left off the f—in’ bridge?”