Trump criticizes Federal Reserve for not lowering interest rates
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President Donald Trump said the Fed should cut rates more aggressively, accusing the board of political bias and comparing U.S. rates to those of Switzerland.
President Donald Trump said on Wednesday that the Federal Reserve should lower interest rates more quickly, arguing that strong economic data should not prevent a more accommodative policy. He claimed the Fed’s board is politically appointed by former presidents and members of his own administration, and suggested that this influences decisions to raise rates.
Trump praised Kevin Warsh, the Fed’s newly appointed chairman, describing his performance as “great” and noting that Warsh took over in May after Jerome Powell, whom Trump has repeatedly criticized for not cutting rates faster, remained on the board as a governor.
"The problem is he has a board, and it's a political board. People put in by Obama, Biden, and me, and there are quite a few members still left, as you understand, and so they vote to raise interest rates. I don't know if they're doing it because they think they're doing a good thing or because they like the politics of it," Trump told reporters.
He added that past periods of strong economic performance led to lower rates, whereas current good numbers appear to result in higher rates. Trump argued that faster cuts are needed to sustain growth and ease the financing burden of the nation’s nearly $40 trillion debt.
The comments coincided with the release of minutes from the Federal Open Market Committee’s July meeting, which indicated that many officials still see higher rates as necessary unless inflation improves further. Recent inflation remains above the Fed’s 2 % target, and the economy grew at an annualized 1.5 % rate in the second quarter, below expectations.
Trump also compared U.S. rates with those of Switzerland, noting that the European nation’s benchmark rate is near zero while the United States pays about 3.5 %. He said he has the “absolute right to cut off all business” with Switzerland, though he maintained that the U.S. does not have a bond market problem despite what he described as unfairly high rates.