Trump says Fed hasn’t done its job ‘prop­erly’

Pres­i­dent wants rate cut; Fed says it won’t bend to po­lit­i­cal pres­sure.

Dayton Daily News - - FRONT PAGE - By Mar­garet Talev

WASH­ING­TON — Pres­i­dent Don­ald Trump, re­new­ing his at­tack on the Fed­eral Re­serve, claimed the stock mar­ket would be “5000 to 10,000” points higher had it not been for the ac­tions of the U.S. cen­tral bank.

“If the Fed had done its job prop­erly, which it has not, the Stock Mar­ket would have been up 5000 to 10,000 ad­di­tional points,” the pres­i­dent tweeted on Sun­day. “Quan­ti­ta­tive tight­en­ing was a killer, should have done the ex­act op­po­site!”

The pres­i­dent de­liv­ered his lat­est as­sault on the Fed as his mo­tor­cade pulled into Trump Na­tional Golf Club in Ster­ling, Va., for a Sun­day out­ing.

His vent­ing comes as his two re­cent picks for the Fed, busi­ness­man Her­man Cain and con­ser­va­tive econ­o­mist Stephen Moore, have come un­der fire, with sev­eral Repub­li­cans in­di­cat­ing Cain may not be able to win con­fir­ma­tion in the Se­nate.

It also comes days af­ter Fed­eral Re­serve Chair­man Jerome Pow­ell, a fre­quent tar­get of Trump’s crit­i­cism, told law­mak­ers at a Demo- cratic Party re­treat that the cen­tral bank won’t bend to po­lit­i­cal pres­sure, ac­cord­ing to two peo­ple in the room for the closed-door event.

Trump picked Pow­ell as Fed chair­man, re­plac­ing Janet Yellen, but later indi- cated that he re­gret­ted the de­ci­sion, and in late 2018 dis­cussed the fea­si­bil­ity of fir­ing him be­fore ap­pear­ing to de­cide against it. Trump has crit­i­cized the Fed’s rate in­creases as it tried to grad­u­ally move them to a level that nei­ther stymies nor stim­u­lates growth.

The rate hikes have slowed some seg­ments of the econ­omy, such as hous­ing, but over­all the U.S. eco­nomic ex­pan­sion con­tin­ues, along with the low­est un­em­ploy­ment in decades and in­fla­tion near the Fed’s 2% tar­get.

Lately, Trump has urged the Fed to cut rates to turn the econ­omy into a “rocket ship,” which White House eco­nomic ad­viser Larry Kud­low said last week would be growth in the 4 to 4.5% range.

The Fed­eral Re­serve raised rates four times in 2018, but has since paused, say­ing it will be “pa­tient” as it as­sesses the need for any ad­di­tional changes in the pol­icy rate, now in a tar­get range of 2.25% to 2.5%.

U.S. stocks have risen sharply this year af­ter the Fed’s dovish pivot, re­vers­ing a late-2018 swoon. The bench­mark S&P 500 In­dex closed Fri­day at 2,907.41, less than 1% be­low its record high close from Septem- ber. U.S. cen­tral bankers in March sig­naled no rate moves in 2019, based on their outlook for solid if un­spec­tac­u­lar eco­nomic growth with in­fla­tion near goal.

If Trump was re­fer­ring to the nar­rower Dow Jones In­dus­trial Av­er­age, his tweet sug­gested the in­dex could be over 36,000 points ab­sent the Fed’s moves. The Dow closed on Fri­day at 26,412.30.

Prior to Trump’s tweet- ing, global pol­i­cy­mak­ers had spent the week­end leap­ing to the de­fense of the Fed and other cen­tral banks fac­ing pres­sure from politi­cians. At talks of the In­ter­na­tional Mon­e­tary Fund in Wash­ing­ton, Euro­pean Cen­tral Bank Pres­i­dent Mario Draghi said that he was “cer­tainly wor­ried about cen­tral bank in­de­pen­dence” and es­pe­cially “in the most im­por­tant jurisdiction in the world.”

While many politi­cians want their cen­tral banks to juice growth by keep­ing mon­e­tary pol­icy easy, the risk is the po­lit­i­cal med­dling leaves in­vestors wor­ry­ing about a flare up of in­fla­tion and push up mar­ket in­ter- est rates in re­sponse, po­ten­tially hurting ex­pan­sions.

SARAH SILBIGER / NYT

Pres­i­dent Don­ald Trump tweeted Sun­day that de­ci­sions by the Fed have slowed the econ­omy and urged rate cuts to turn the econ­omy into a “rocket ship.”

CO­RUM / NYT SA­MUEL

Trump’s at­tacks on Fed­eral Re­serve Chair­man Jerome Pow­ell are put­ting Pow­ell in a bind as he tries to bol­ster the econ­omy with­out dam­ag­ing the in­tegrity of an in­de­pen­dent Fed.

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