Trump says he 'maybe' regrets picking Powell as Fed chair

Fredrick Soto
October 28, 2018

Meanwhile, Powell and his colleagues have continued to raise interest rates, and rarely does a week goes by without several Fed policymakers giving public remarks about why rate hikes are necessary in the face of an economy with unemployment at a 49-year low and inflation near the Fed's 2-percent goal. "He was supposed to be a low-interest-rate guy", he said.

Trump says the Fed is raising rates too fast, blunting the economic stimulus from tax cuts and deregulation, and making life harder for his administration as the tariffs resulting from the USA trade war with China and other countries begin to bite.

Trump complained to the Journal on Tuesday that former President Barack Obama - who came into office amid the worst recession in decades - didn't have to deal with the burden of rising interest rates.

Mr. Trump said it was "too early to say, but maybe" he regrets nominating Mr. Powell.

"If strong growth and robust employment gains were to continue into 2019 and be accompanied by a material rise in actual and expected inflation", he said, "that circumstance would indicate to me that additional policy normalization might well be required beyond what I now expect". "I believe that some further gradual adjustment in the federal funds rate will be appropriate".

At the Rose Garden ceremony marking his nomination by Trump to the chairmanship, Powell was careful to slip into his remarks a reference to the Fed's independence: "I strongly share that sense of mission and am committed to making decisions with objectivity and based on the best available evidence, in the longstanding tradition of monetary policy independence".

The last hike already drew criticism from Trump. On Wednesday, Oct. 17, the Federal Reserve releases minutes from its September meeting when it lifted rates for the third time this year.

"Mr Trump also recently said the Fed had "gone crazy" and was öut of control".

"Every time we do something great, he raises the interest rates", he said.

Inflation has increased about two percent this year, in line with the Fed's target, but economists fear growing demand, combined with the tariffs and a labor shortage could ignite price increases.

He also said a recent pickup in productivity, a rebound in business investment, a historically high household saving rate, and tax cuts are tailwinds for the economy. He said that could change if the data move and inflation turns lower.

However, the Fed may still have a point. The rate hikes are also created to give it room to provide support for the economy whenever the next downturn arrives. His confirmation helped fill the ranks on the Fed's Board of Governors, which was operating with three out of potential seven members.

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