Trump renews attacks on Fed after rate increase
By TONY ROMM
President Donald Trump lashed out at the Federal Reserve earlier this week over its decision to raise interest rates, as he reprised his earlier threats to cut off a broad swath of U.S. trade unless the central bank bows soon to his demands for lower borrowing costs.
Speaking to reporters, Trump acknowledged that he had talked to Kevin Warsh, the Fed chair, at some point before the Fed board voted unanimously to lift rates by a quarter of a percentage point for the first time in three years.
“I told Kevin, I said, ‘You might as well vote with the board because it’s just not going to matter,’” Trump said. “The board is very hostile. They’re very political. They’re doing the wrong thing. They’re a bunch of politicians. They are people put on by politicians.”
Trump praised Warsh, who did ultimately support the rate increase, even as he admonished other Fed governors for their vote. In doing so, the president also revived his earlier, eyebrow-raising ultimatum that he could halt trade to countries with which the United States has a trade deficit unless the Fed delivers on his long-sought rate cuts.
“If we wanted to get rid of deficits, which we could do with the swipe of the pen with every country, we’d make a trillion and a half dollars a year,” Trump said. “We’d pay off our debt. We’d do all sorts of things. But we haven’t chosen to do that. But at some point, we will. Interest rates are too high.”
Such a move could cause immense blowback for U.S. families and businesses, while the rate cuts that Trump seeks — to 1% or lower, he said — could exacerbate inflation and make the central bank’s job even more difficult.
Still, Trump seemed unfazed as he doubled down during a speech later in North Carolina, where he pivoted from a broadside against the Fed to blasting U.S. allies including Canada, Mexico and the European Union.
“All we have to say is, ‘You know what, we’re not trading with you anymore, we don’t need anything they have,’” he said in his speech.
The attacks marked the latest eruption in Trump’s ongoing feud with the nation’s central bank, a politically independent institution at the heart of the U.S. economy. In a bid to force down rates, the president has consistently ratcheted up his attacks — and now seems willing to leverage international commerce to secure his desired outcome on monetary policy.
The pressure campaign has continued even after Trump successfully installed Warsh as the new chair of the Fed earlier this year. The Fed chair, for his part, declined to discuss Trump’s threats at a news conference earlier Wednesday.
In the days before the Fed meeting, White House officials had tried to walk a fine line.
On one hand, Trump and his aides had praised Warsh, insisting that they respected his work to address a set of challenges that includes the battle against inflation. But, at the same time, the president continued to question the political motivations of other Fed members, part of an effort by Trump to downplay the fact that inflation remains well above policymakers’ 2% target.
“Whatever he does tomorrow, we’re going to respect the process, and understand that he’s doing what he and the committee think is correct,” Kevin Hassett, the director of the White House National Economic Council, said in reference to Warsh during an appearance on CNBC earlier this week.
“That said,” Hassett continued, “we also don’t think that in a democracy that one is not allowed to talk about policy and economics.”
But Trump did more than talk about the merits of rates when he issued his boldest threat in early September. Reissuing his demand for the “the LOWEST RATE of any country in the World,” the president posted to social media at the time: “LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT.”
The comments had no effect on the Fed, which ultimately raised rates on a unanimous vote Wednesday, prompting Trump to reprise his pressure campaign. Returning to social media, he argued that the country is “BOOMING,” then claimed the United States could make more money if it stopped trading with certain countries.
“The word ‘Deficit’ is nothing more than a fancy word for LOSS,” Trump said.
Before Wednesday, other White House officials had been coy about the president’s intentions. Appearing Sunday on CNN’s “State of the Union,” Hassett revealed little about whether the president intends to follow through with his threat.
“I don’t expect that trade is going to go to zero,” he began, “but I do think that the president has a very strong opinion that interest rates could be a lot lower. And we will just have to wait and see what the Fed decides.”
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