Fed chief’s job safe, Trump says
WASHINGTON — Hours after excoriating the Federal Reserve and its chief, Jerome Powell, for having “no guts,” President Donald Trump told reporters his hand-picked chairman’s job is safe, though he added, “I don’t think he knows how to play the game very well.”
The comments came Wednesday after the central bank made a modest cut in interest rates, continuing to buck Trump’s push for more aggressive action. Within a half-hour of the announcement, Trump was on Twitter. “Jay Powell and the Federal Reserve Fail Again,” he tweeted. “No guts, no sense, no vision! A terrible communicator.”
Trump and Powell have been locked in a standoff for months over what kind of stimulus, if any, is needed to shield the U.S. economy from the forces that are eroding global growth. The Organization for Economic Co-operation and Development reported Thursday that the U.S.-China trade war had dragged growth to its lowest level since the financial crisis.
U.S. law gives Trump the authority to fire Powell “for cause,” but the courts do not generally consider policy differences as “cause.” For his part, Powell said he intends to serve the entirety of his fouryear term and that he would refuse to leave his post even if Trump demanded it.
Last week, Trump derided Powell and other Fed leaders as “boneheads” for not slashing rates to zero or even into negative territory as the European Central Bank has done for the past five years — a controversial move that is without precedent in the United States. Trump maintains that Europe is using negative rates to gain an unfair advantage over the U.S., but experts are stymied as to why the president is calling for emergency measures at a time of relative economic strength.
“Look, we have a great economy, and that’s not going to make the difference,” Trump told reporters Wednesday during a visit to the U.S.-Mexico border near San Diego, expressing his frustration that the rate cut wasn’t bigger. “But it would have given us an edge, and instead, somebody else has an edge, but they’re so far behind us they can’t catch us.”
When asked whether Powell’s job was safe, Trump responded: “Yeah, it’s safe. I mean, sure. Why not?”
When a reporter said Trump had paused before answering, Trump denied it. Then he reiterated his disappointment in Powell.
The Fed’s rate cut was only the second since the recession, but it did little to excite markets, which barely reacted to the news. The Fed trimmed its benchmark interest rate by a quarter-percentage point despite dissent from three officials, two of whom deemed the cut unnecessary and one who said a bigger one was needed.
After the meeting, Powell was noncommittal about future cuts: “There will come a time, I suspect, when we think we’ve done enough,” he told reporters. “But there may also come a time when the economy worsens and we would then have to cut more aggressively. We don’t know.”
Powell declined to respond to Trump’s attacks but emphasized the importance of maintaining an independent Fed, adding that the central bank “will continue to conduct monetary policy without regard to political considerations.”
“The Fed doesn’t exist to prop up the financial markets, but to facilitate a healthy economy — and financial markets are, in the long term, built on a healthy economy,” Michael Farr, president of Farr, Miller & Washington, said in a statement to The Washington Post. “There are plenty of things for the longterm investor to be concerned about, but the Fed is concerned as well.”