As Fed begins meeting, Trump again calls for no rate hike
President tweeted approval of WSJ editorial that laid out reasons for pause from raises
WASHINGTON— U.S. President Trump continued on Tuesday morning his public campaign calling on the Federal Reserve to refrain from raising interest rates during the central bank’s two-day meeting that begins later in the day.
On Twitter, Mr. Trump approvingly cited an editorial in Tuesday’s Wall Street Journal that laid out reasons for the Fed to pause from its recent pattern of quarterly rate increases.
“I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake,” he said on Twitter.
Mr. Trump also appeared to argue for the central bank to slow or stop its process of shrinking its holdings of Treasury and mortgage bonds, which it started one year ago. The Fed isn’t selling any of the securities it acquired during bond-buying campaigns to stimulate growth after the 2008 financial crisis, but it is allowing up to $50 billion (U.S.) in bonds to run off the portfolio without replacing them.
“Don’t let the market become any more illiquid than it already is. Stop with the 50 B’s,” Mr. Trump said. “Feel the market, don’t just go by meaningless numbers. Good luck!”
A Fed spokeswoman declined to comment.
In the last quarter century, presidents haven’t commented on monetary policy, calculating that bond investors would ultimately reward the nation’s economy with lower borrowing costs by demonstrating respect for an independent central bank. Mr. Trump has escalated his criticism of the central bank since the summer.
Mr. Trump is also responsible for filling four of the current five seats on the Fed’s board of governors, including Fed Chairman Jerome Powell, whom he tapped to lead the central bank last year.
Mr. Powell has said the Fed’s decisions won’t be guided by political pressure and instead will rest on economic analysis. And all three of the Fed’s rate increases this year have been approved on a unanimous vote. But that hasn’t quieted speculation from market commentators over whether Mr. Trump’s criticism could have an effect.
The Fed last raised its benchmark rate to a range between 2% and 2.25% in September, and another quarter-percentage-point increase was widely expected at the meeting that concludes Wednesday. Fed officials can justify another rate increase by pointing to strong economic data, including a 3.7% unemployment rate and steady consumer spending.
But inflation hasn’t accelerated this year, giving Fed officials the ability to telegraph a slower pace of rate increases for 2019. And global growth has slowed in recent months, removing a tailwind that had supported growth since the middle of 2017.
Investors, meanwhile, have been uneasy over the prospect of increased trade tensions between Washington and Beijing. Some market analysts have cited Mr. Trump’s attacks on the Fed as another source of uncertainty rattling investor confidence.
“A strong president doesn’t mock the Fed chairman; a strong president doesn’t seek a trade deal one day then proclaim he’s ‘Tariff Man’ the next day,” said Greg Valliere, chief global strategist at Horizon Investments in a client note earlier Tuesday.