President Donald Trump on Friday turned up the heat against the the Federal Reserve, including his hand-picked Fed Chair Kevin Warsh, over lowering interest rates, threatening to cut off trade with certain economies with which the US has a deficit if the central bank fail to act.
This comes amid the spectulation that Fed officials might raise interest rates at their next policy meeting starting 15 September.
Get smart and BE PATRIOTS for a change: Trump
In a lenghthy social media post, the US President blasted Warsh and board members to “get smart” and “BE PATRIOTS for a change.”
Pointing at stronger-than-expected August jobs report, he noted, “Great jobs number just announced, breaking all estimates (except mine!) by double and triple – And you haven’t seen anything yet! EMPLOYERS ADDED 162,000 JOB IN AUGUST. Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!”
“A STRONG COUNTRY MEANS A LOWER INTEREST RATE – IT’S A BETTER CREDIT…Very simple! We should have the LOWEST RATE of any country in the World, like “the old days.”
“…LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” he further threatened.
Trump renews his pressure on Fed chair
The message shows that Trump is running out of patience with the Fed just months after Warsh took over from Jerome Powell, whom the president routinely attacked over the bank’s policy decisions.
He had resoanably pulled back the pressure campaign against the Fed after Warsh became chair, through his new post he revived his pressure tactics
The president went even further than his top White House economic adviser, Kevin Hassett, who earlier Friday said that the jobs numbers strengthened the case to keep interest rates the same.
“We respect the Fed’s independence, but I think the argument for holding steady would be pretty strong,” Hassett said on CNBC.
Better than expected job data
The jobs report showed nonfarm payrolls increased 162,000 last month and July’s job losses were revised away, suggesting the labor market has more momentum than previously thought.
Olu Sonola, head of US economics at Fitch Rating called the jobs report “unequivocally strong,” reaffirming the stability of the labor market. But, he added, “The real event risk is next week’s CPI report. That is the print capable of moving the needle.”
The Bureau of Labor Statistics will release August data for the producer price index on Thursday, followed by the consumer price index on Friday.
With Fed officials concerned by persistently high inflation, but divided over how monetary policy should respond in the near term, new evidence of price pressures could tilt the Federal Open Market Committee into a rate hike. Cooler reports are likely to keep the Fed on hold, as it’s been through five previous meetings this year.
(With inputs from Reuters and Bloomberg)