- Carlos Barria/Reuters
- President Donald Trump attacked the Federal Reserve once again Tuesday during an interview with Fox Business Network.
- “My biggest threat is the Fed, because the Fed is raising rates too fast,” Trump said.
- Trump has waged a sustained campaign against the Fed, calling its interest-rate hikes “crazy” and “loco.”
President Donald Trump on Tuesday went after the Federal Reserve with some of his harshest language yet.
During a Fox Business Network interview, Trump said the biggest problem facing the US economy and stock market was the Fed’s path of interest-rate hikes under Chairman Jerome Powell. The central bank has been increasing interest rates for nearly three years.
“My biggest threat is the Fed, because the Fed is raising rates too fast,” Trump told the Fox Business host Trish Regan. “And it’s independent, so I don’t speak to them, but I’m not happy with what he’s doing because it’s going too fast. Because you looked at the last inflation numbers – they are very low.”
The Fed’s interest-rate increases theoretically make it more expensive for businesses and companies to borrow money from banks. This decreases the amount of capital flowing around the financial system and eventually curtails economic growth. Interest-rate hikes are also thought to curtail price increases and prevent runaway inflation.
But the Fed is increasing interest rates from the 0% level – a historic low set during the financial crisis – and many indicators of lending remain loose. So while the Fed appears to be moving toward a position that could curtail growth, it’s unclear whether the central bank is there yet.
Even the possibility of a headwind to economic growth, however, has provoked Trump into a series of attacks on the Fed and Powell.
Previous presidents over the past few decades typically refrained from commenting on the Fed’s interest-rate policy, since the central bank is independent and presidential pressure on the Fed typically ends in disaster. But as with many other aspects of the office, Trump has broken tradition.
Trump has railed against the Fed repeatedly in recent weeks, saying the central bank “has gone crazy” and calling its interest-rate hikes “loco.”
“I really disagree with what the Fed is doing,” Trump told reporters October 10 in Pennsylvania.