WASHINGTON – President Donald Trump lacks official power to make the Federal Reserve cut interest rates, but he may have found a way to force its hand: stoking economic uncertainty.
The Fed’s chairman, Jerome Powell, has signaled that he and his colleagues could cut interest rates at their upcoming meeting as inflation remains stubbornly low and risks, including Trump’s trade war with China, threaten economic growth. Powell, speaking in Paris on Tuesday, reiterated that the Fed would act as appropriate to sustain the economic expansion.
Trump continues to keep the Fed – and the world – on policy tenterhooks, saying at the White House on Tuesday that there was a long way to go to reach a trade deal with China and suggesting he could still impose tariffs on more Chinese goods. The president, speaking during a meeting of his cabinet, also took a swipe at the Fed, saying, “We would have done even better had we had a Federal Reserve that didn’t raise interest rates so quickly.”
Trump said China was under no such pressure from its central bank, noting that President Xi Jinping was “his own Fed.”
“They’re pumping money into their system and they’re lowering rates very substantially,” he said.