Trump Suggests Fed Could Help His Trade Fight
President Donald Trump slammed the Federal Reserve for high interest rates in a tweet on Tuesday, complaining the euro and other currencies were “devalued” against the dollar.
“The Fed interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!” Trump said on Twitter, renewing his complaints about the U.S. central bank a week before it meets in Washington to discuss monetary policy.
The president also tweeted that the U.S. has “VERY LOW INFLATION,” calling it a “beautiful thing!
U.S. inflation was 1.5 per cent in April, according to the Fed’s preferred gauge, and has been under its two per cent target for most of the last seven years.
Fed officials meeting June 18-19 are expected to debate the need for a rate cut to shelter the U.S. economy from fallout, caused in part by Trump’s escalating dispute with some of the U.S.’s largest trading partners. Investors see a 75 per cent probability of a quarter-point cut in July.
Trump’s tweet on the euro appeared to have been prompted by a Bloomberg Opinion piece on Europe bracing for a summer of “overtourism,” to which the president linked as he refreshed his frequent vexation over the dollar’s value.
The Trump administration last month signaled intent to turn the $5.1 trillion-a-day global currency market into the next battlefield of his trade war with a Commerce Department plan that would allow the U.S. to apply countervailing tariffs on nations seen to be actively driving down their currencies to boost exports.
U.S. Treasury Secretary Steven Mnuchin, speaking in an interview Saturday in Fukuoka, Japan, where he was attending a Group of 20 meeting, said the proposal does not signal a preference for a weaker dollar.
Trump’s complaints are his latest taunts of the Fed, shattering a longstanding White House tradition of public silence on monetary policy out of respect for Fed independence.
On Monday Trump vented in a CNBC interview that the U.S. central bank doesn’t “listen” to him and contrasted its lack of obedience with the control that Chinese President Xi Jinping wields over the People’s Bank of China.
Jerome Powell, whom Trump installed as Fed chairman last year, has refused to respond to the president’s criticism and repeatedly stressed that policy makers will ignore political pressure as they set policy to support maximum employment and stable prices.