Donald Trump calls ‘loco’ Federal Reserve too ‘aggressive'
It was the US president’s second broadside against America's central bank in the last 48 hours following a sell-off on Wall Street
US President Donald Trump continued criticism against the Federal Reserve, calling its interest rate increases a “ridiculous” policy.
Mr Trump said America's central bank was making it more expensive for his administration to finance its escalating deficits.
“I’m paying interest at a high rate because of our Fed. And I’d like our Fed not to be so aggressive because I think they’re making a big mistake,” Mr Trump said in an interview on Fox & Friends on Thursday.
It was his second broadside against the US central bank in the last 48 hours, following a sell-off on Wall Street partly attributed to investors fully adjusting to the central bank’s steady rate increases, and an uptick in particular in yields on long-term US Treasury bonds that are an important, more secure alternative to stock investments.
The president’s remarks were quickly qualified by National Economic Council Director Larry Kudlow, who said the Fed was “on target” in policies that were responding to a strong economy.
The rise in interest rates is “a sign of economic health, that is something to be welcome and not feared,” Mr Kudlow said on CNBC. “The president is not dictating policy to the Fed... they are independent. They are going to do what they are going to do.”
Mr Trump himself later told reporters he would not try to oust chairman of the Fed Jerome Powell, his handpicked successor to former Fed chair Janet Yellen, and a well-regarded insider in moderate Republican circles. He took over just eight months ago, largely continuing policies set in motion by his predecessor.
Past US presidents have criticised the central bank, but the recent run of invective was unusual even for Trump.
Though the Fed has been raising its overnight target policy rate, a benchmark for lending costs overall, the current level of between 2 and 2.25 per cent remains just half the average set by the Fed between 1990 and the start of the 2007 to 2009 recession.
“The problem that I have is with the Fed. The Fed is going wild. I mean I don’t know what their problem is but they are raising interest rates and it’s ridiculous,” said Mr Trump.
“The problem in my opinion is Treasuries and the Fed. The Fed is going loco and there is no reason for them to do it and I’m not happy about it.”
A Fed official said the central bank would not comment on the president’s remarks.
Global economic leaders including International Monetary Fund head Christine Lagarde came to the Fed’s defence, noting that the independence of monetary policy from the influence of elected officials has become a touchstone of effective economic governance.
At IMF meetings in Bali, Ms Lagarde said she “would not associate” Fed chair Jerome Powell “with craziness".
Updated: October 12, 2018 12:41 PM