U.S. President Donald Trump on Thursday cast aside concerns about the Federal Reserve91裸聊视频檚 independence, saying he was 91裸聊视频渘ot happy91裸聊视频� with the Fed91裸聊视频檚 recent interest rate increases.
Trump told CNBC in an interview: 91裸聊视频淚 don91裸聊视频檛 like all of this work that we91裸聊视频檙e putting into the economy and then I see rates going up.91裸聊视频�
Last month, the Fed raised its benchmark rate for a second time this year and projected two more increases in 2018. Its rate hikes are meant to prevent the economy from overheating and igniting high inflation. But rate increases also make borrowing costlier for households and companies and can weaken the pace of growth. In particular, the Fed91裸聊视频檚 most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law last year.
The president acknowledged that his comments about the Fed would likely raise concerns. The central bank has long been seen as needing to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.
The Fed91裸聊视频檚 dual mandate is to maximize employment and stabilize prices. By maintaining its independence, the central bank can make politically contentious decisions to combat economic challenges, like the huge bond purchases it made after the 2008 financial crisis to help drive down long-term rates to support the economy. That policy drew rebukes from many Republican lawmakers.
In February, Jerome Powell, Trump91裸聊视频檚 hand-picked choice, became Fed chairman. Last week, Powell said in an interview with the radio program Marketplacethat he didn91裸聊视频檛 expect to face pressure from the White House.
91裸聊视频淲e have a long tradition here of conducting policy in a particular way, and that way is independent of all political concerns,91裸聊视频� Powell said. 91裸聊视频淲e do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently.91裸聊视频�
He added, 91裸聊视频淣o one in the administration has said anything to me that really gives me concern on this front.91裸聊视频�
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The reaction to Trump91裸聊视频檚 remarks in the financial markets was muted. The U.S. dollar fell to 112.46 yen from 112.84 yen earlier, and yields on Treasurys dipped slightly.
After Trump91裸聊视频檚 interview with CNBC was made public, Lindsay Walters, a White House spokeswoman, said the president 91裸聊视频渞espects the independence of the Fed.91裸聊视频�
91裸聊视频淭he president91裸聊视频檚 views on interest rates are well-known, and his comments today are a reiteration of those long held positions, and public comments,91裸聊视频� Walters said.
Speaking about Fed policy in his interview with CNBC, Trump said he is 91裸聊视频渓etting them do what they feel is best.91裸聊视频�
But his comments raised alarms, including with some former Fed officials who saw in his remarks a possible effort to apply public pressure on the central bank.
91裸聊视频淚 am not pleased,91裸聊视频� said Carl Tannenbaum, a former Chicago Fed official and chief economist at Northern Trust. 91裸聊视频淭he remarks certainly aren91裸聊视频檛 an immediate threat to Fed independence, but they break with the tradition of respectful distance.91裸聊视频�
Randall Kroszner, a former Fed governor, said the central bank has withstood political pressure before and will continue to do so under Powell91裸聊视频檚 leadership.
91裸聊视频淭he Fed has often faced political pressures 91裸聊视频� from Congress, presidents, Treasury secretaries and innumerable outside groups,91裸聊视频� said Kroszner, an economics professor at the University of Chicago. 91裸聊视频淢y experience at the Fed is consistent with what Jay Powell recently said 91裸聊视频� being non-political is deep in the Fed91裸聊视频檚 DNA 91裸聊视频� and I believe that Jay will keep it that way.91裸聊视频�
During the 2016 presidential campaign, Trump was highly critical of the Fed and accused its policymakers of keeping rates at ultra-low levels to favour Democrats. But he also told CNBC during the campaign that he is a 91裸聊视频渓ow interest-rate-person.91裸聊视频�
Past efforts to apply political pressure on the Fed have sometimes hurt the economy. President Richard Nixon encouraged Arthur Burns, the Fed chairman at the time, to help boost economic growth ahead of Nixon91裸聊视频檚 1972 landslide re-election. That episode ultimately triggered runaway inflation that took a decade to tame and required raising the Fed91裸聊视频檚 policy rate above 15 per cent 91裸聊视频� more than eight times the rate91裸聊视频檚 current average.
George H.W. Bush91裸聊视频檚 administration complained that he felt the Fed91裸聊视频檚 failure to cut rates more quickly in 1992 contributed to his re-election defeat that year.
When Robert Rubin led President Bill Clinton91裸聊视频檚 National Economic Council, he adopted a rule of never commenting on the Fed91裸聊视频檚 actions 91裸聊视频� a policy that was subsequently followed by the George W. Bush and Obama administrations.
The Associated Press
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