Trump criticizes Fed for rate hikes in break with precedent

President Trump on Thursday criticized the Federal Reserve for raising interest rates and accused Chairman Jerome Powell of hindering the U.S. economy with the bank’s monetary policy.

Trump told CNBC that he’s “not thrilled” with Powell, who he appointed to lead the Fed, because he has gradually raised interest rates. The president insisted that higher interest rates have prevented the economy from expanding to its full potential.

“We go up and every time you go up they want to raise rates again. I don’t really — I am not happy about it. But at the same time I’m letting them do what they feel is best,” Trump said. 

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“I don’t like all of this work that we’re putting into the economy and then I see rates going up.”

Trump’s comments are a stunning rebuke of the Fed from a sitting president. The Fed was designed to be immune from political influence in its efforts to encourage low unemployment and stable prices.

Presidents have historically avoided putting direct pressure on the Fed, and White House economists typically avoid commenting on the central bank’s monetary policy.

Trump acknowledged that his comments broke with decades of precedent, but said he didn’t care about the criticism it would provoke.

“I’m just saying the same thing that I would have said as a private citizen,” Trump said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”

Trump has previously said he prefers low interest rates and praised former Fed Chair Janet Yellen for holding off on rate hikes despite widespread criticism from conservative lawmakers and economists.

Low interest rates reduce the costs of borrowing money and typically boost investment, economic expansion and hiring. The Fed has been slowly raising interest rates since December 2015 in an effort to avoid overheating the U.S. economy and spurring price increases.

Interest rate hikes can suppress stock markets and the unemployment rate, two metrics Trump and Republicans have used to prove the power of their economic policy. U.S. unemployment stands at 4 percent, close to record lows, while the economy has continued to expand.

The Fed has raised interest rates twice in 2018, and is expected to issue at least two more rate hikes before the end of the year.

Lawmakers have expressed worries that Trump could try to pressure Powell to keep rates low ahead of the elections in a bid to keep unemployment down.

His critics cite former President Nixon’s pressure on former Fed Chairman Arthur Burns to hold off on rate hikes ahead of the 1972 election, which economists say led to rampant inflation.

Trump’s top economic adviser exacerbated those fears in a TV interview last month. National Economic Council Director Larry Kudlow told Fox Business Network in June that the Fed should move slowly with interest rate hikes.

“He’s a good man,” Kudlow said, referring to Powell. “My hope is that they understand that and that they will move very slowly.”

Powell, a Republican, was appointed to the Fed in 2012 by former President Obama and voted in lockstep with Yellen while she led the bank.

The chairman brushed off fears he’d be influenced by Trump in an interview last week, saying “no one in the administration has said anything to me that really gives me concern on this front.”

“We don’t take political considerations into account,” Powell told “Marketplace” on July 12.