By Jacob Bogage
WASHINGTON, Sept 16 (Reuters) – US President Donald Trump on Wednesday leveled his most pointed — though still indirect — criticism yet at his hand-picked Federal Reserve chief, fuming on social media over the central bank’s move to raise interest rates in a bid to calm persistent inflation.
“Interest Rates in the United States should be 1%, or less, because we are the Best Credit in the World — BY FAR,” he wrote on Truth Social, his social media platform.
“LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” he concluded.
It was the closest Trump has come yet to leveling one of his broadsides directly at Kevin Warsh, picked by Trump earlier this year to take over the Fed from Jerome Powell, a figure the president frequently derided for not delivering the dramatic rate cuts Trump has routinely demanded.
Trump, as he has in recent social media posts, also appeared to connect persistent US trade deficits with the borrowing costs set by the central bank, even though the two are largely unrelated. Trump had previously threatened to cut off all trade from countries with which the US had trade deficits if the Fed did not cut interest rates.
“The word “Deficit” is nothing more than a fancy word for LOSS. We are “carrying” almost every country in the World, and that cannot go on any longer,” Trump posted on Wednesday.
Trump’s screed came shortly after Fed policymakers unanimously agreed on Wednesday to raise rates by 25 basis points to 3.75%-4.00%, an action that Warsh described at a subsequent press conference as “a sober decision, serious decision, responsible decision.”
“The plain fact is that inflation is too high and has been for too long,” Warsh said.
And rates are likely going still higher. New policy projections showed 16 of 18 policymakers anticipate at least one more quarter-percentage-point hike by the end of this year, with only two of them seeing rates remaining stable from here. Warsh said again Wednesday that he is opposed to sharing forward guidance and did not submit a projection.
Trump tapped Warsh in January to succeed Powell, whom Trump nicknamed “too late” for taking a more cautious approach to rate cuts last year than Trump wanted. Warsh, for his part, took office with a pledge to maintain the Fed’s independence on setting monetary policy while at the same time working in greater concert with the White House on other matters.
Since Warsh took office in June — after a Senate confirmation that was nearly derailed by a federal investigation into Powell and renovations of the Fed headquarters building — he initially steered Fed officials to holding rates steady, although not all policymakers agreed with the approach in the face of inflationary pressures. On Wednesday, he said the time had come for the central bank to take action.
“This summer’s inflation readings do not tell me that underlying trends have improved,” he told reporters.
Asked at his press conference if he planned to meet with Trump to explain the Fed’s decision, Warsh demurred.
“I don’t have anything for you on discussions with the president,” he said.
Trump’s post was the second time this week he’d taken aim at his own appointees. After the Supreme Court struck down his attempt to regulate how states issue mail ballots, Trump wrote of the three justices he appointed: “These are not the people I interviewed to serve on the United States Supreme Court, they are merely a shell of their original selves.”
White House officials spent much of the week publicly pressuring the Fed to hold rates steady. One former White House official told Reuters the president’s social media post about the Fed was a tame response in the context of that campaign.
“The president is making clear he disagrees with the policy without explicitly saying Warsh is personally to blame, giving him a nickname, or threatening retaliatory action against the Fed,” said the person, who spoke on the condition of anonymity because they were not authorized to speak publicly. “Instead he’s redirecting his ire toward trading partners, which have little to do with the monetary policy decision.”
(Reporting by Jacob Bogage, Ismail Shakil and Bhargav Acharya; Editing by Dan Burns and Andrea Ricci )
Comments