Trump says he ‘maybe’ re­grets pick­ing Fed’s Pow­ell

Calgary Herald - - FINANCIAL POST - MIKE DORN­ING

U.S. Pres­i­dent Don­ald Trump stepped up his at­tacks on Fed­eral Re­serve Chair­man Jerome Pow­ell, say­ing he “maybe” re­grets ap­point­ing him and de­mur­ring when asked un­der what cir­cum­stances he would fire the cen­tral bank chief.

Al­most a year since nom­i­nat­ing Pow­ell to the post, Trump told the Wall Street Jour­nal in an in­ter­view Tues­day that he was in­ten­tion­ally send­ing a di­rect mes­sage that he wanted lower in­ter­est rates, even as he ac­knowl­edged that the cen­tral bank is an in­de­pen­dent en­tity.

Trump said in the in­ter­view that Pow­ell “al­most looks like he’s happy rais­ing in­ter­est rates” and that it’s “too early to tell, but maybe” he re­grets ap­point­ing him.

Trump sidestepped a ques­tion on what cir­cum­stances would lead him to re­move Pow­ell. “I don’t know,” the pres­i­dent said.

That con­trasted with his re­sponse to a sim­i­lar ques­tion on Oct. 11, when he an­swered, “I’m not go­ing to fire him.”

Pow­ell has so far brushed off the at­tacks, not­ing the Fed is in­de­pen­dent and ar­gu­ing by rais­ing rates grad­u­ally it’s just seek­ing to nor­mal­ize mon­e­tary pol­icy in an “ex­tra­or­di­nary” econ­omy. He’s also sug­gested that the cen­tral bank needs to keep its eye on pos­si­ble fi­nan­cial froth — the trig­ger for the last two re­ces­sions — as well as in­fla­tion for signs of over­heat­ing.

Asked on Wednes­day about the pres­i­dent’s broad­side against the cen­tral bank, Sen. Mike Crapo of Idaho de­clined to com­ment about whether he’s pleased with Pow­ell. “I’m not go­ing to get into that is­sue,” said Crapo, chair­man of the Se­nate Bank­ing Com­mit­tee.

In­vestors so far don’t see the Fed bend­ing to the pres­sure to slow the pace of hikes. If doubts were to emerge in mar­kets about the cen­tral bank’s cred­i­bil­ity, then in­vestors could push up bor­row­ing costs, ul­ti­mately slow­ing the econ­omy and hurt­ing stocks thus mean­ing Trump’s lob­by­ing had back­fired.

The pres­i­dent may be try­ing to cast the Fed as a scape­goat with just two weeks to go be­fore elec­tions that will de­ter­mine whether Repub­li­cans main­tain con­trol of Congress.

Trump has lit­tle re­course if he wants to make any rad­i­cal change. He can’t re­move Fed gov­er­nors, in­clud­ing Pow­ell, ex­cept for illde­fined “cause,” and the Se­nate must con­firm re­place­ments.

Trump has re­peat­edly crit­i­cized the Fed for rate in­creases, ratch­et­ing up his rhetoric in re­cent weeks. Just this month, he called the cen­tral bank his “big­gest threat” and blamed it for fall­ing stocks.

He’s also slammed it as “out of con­trol” and said it was “go­ing loco.”

Trump’s crit­i­cisms mark a de­par­ture from the prac­tices of his re­cent pre­de­ces­sors. Pres­i­dents for more than two decades mainly avoided pub­lic com­ments on Fed pol­icy as a way of demon­strat­ing re­spect for the in­sti­tu­tion’s in­de­pen­dence in the hope that would ul­ti­mately mean lower rates and smoother eco­nomic ex­pan­sions.

SU­SAN WALSH/AP FILES

Fed­eral Re­serve Chair­man Jerome Pow­ell has been crit­i­cized for rais­ing rates.

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