President Donald Trump on Wednesday continued his attacks on Federal Reserve Board of Governors chair Jerome Powell as the American central bank again rebuffed his demand for lower interest rates, keeping them steady for at least another month.
Speaking in the Roosevelt Room during a bill signing ceremony, the president hit out at Powell, who he has blamed for decisions made by the bank’s powerful Open Markets Committee, using the derisive nickname he assigned him when he began to demand lower rates months earlier.
“We should be the lowest interest rate. And we’re not. We’re … number 38 because of the Fed. It’s all because of the Fed. He’s done a bad job. Now. He’s got a meeting today, but I call him too late. You know, he’s always too late, even if he does it today, probably won’t. I hear they’re going to do it in September, not today,” Trump said.
In a statement, the bank justified the decision to keep rates steady by noting that while employment and economic growth remain steady after Trump’s first half-year in office, the rate of inflation remains “somewhat elevated.”
Powell offered some further explanation during remarks announcing the decision in which he stressed that Trump’s “reciprocal tariffs” have led to some increased inflation around goods, the long-term economic effects of tariffs remain to be seen.
The Fed’s decision to keep interest rates stagnant comes the same day that the Bureau of Economic Analysis released its report showing that GDP grew by 3 percent in the last economic quarter between April and June. This came after the previous quarter where GDP actually shrank, which Trump blamed on his predecessor Joe Biden.
The decision comes after weeks of bullying and browbeating of Powell by Trump and his allies, including top officials at the Office of Management and Budget and the Federal Housing Finance Administration, who have seized on long-running renovations at the Fed’s headquarters as a possible pretext under which Trump would fire Powell, who he appointed to lead the Fed during his first term.
Trump and his allies have said the $2.5 billion renovation of the Fed headquarters and a neighboring building reflects an institution run amok — a belief they had hoped to verify in during a tour of the construction site last week, during which Trump made a further attempt to further ratchet up pressure on Powell by confronting him over alleged wasteful cost overruns.
Trump’s attacks have put the Fed, a historically independent institution, under a harsh spotlight. Undermining its independence could reduce the Fed’s ability to calm financial markets and stabilize the U.S. economy.
The president has made no secret of his distaste for Powell, whom he nominated to lead the Federal Reserve in 2017, primarily because of Powell’s refusal to lower interest rates, particularly in light of Trump’s decision to levy tariffs.
Powell has said that the central bank needs time to see what effects tariffswill have on inflation and employment before making a determination on interest rates. This has prompted Trump to call Powell a “stupid person.”
The president can do little to remove Powell. Joe Biden re-nominated Powell for another five-year term in 2021 based on his steady leadership during the 2020 COVID-19 pandemic, and his term would expire in May. Federal statute says the president can only remove Powell “for cause.”
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