Trump Suggests Appointing Himself Head Of The Fed
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Trump is very unhappy with Powell for not bending to his will on interest rates:
With the Federal Reserve just hours away from its latest decision on interest rates, President Donald Trump on Wednesday lambasted Chair Jerome Powell, calling him “stupid” while doubting the central bank would cut. […]
“So we have a stupid person. Frankly, you probably won’t cut today,” Trump said in impromptu remarks just outside the White House. “Europe had 10 cuts, and we had none. And I guess he’s a political guy, I don’t know. He’s a political guy who’s not a smart person, but he’s costing the country a fortune.”
The remarks came just about four hours before the rate-setting Federal Open Market Committee was to release its statement on interest rates, along with an update of where it sees policy and several key economic measures heading over the next several years. […]
For one, the longer-term impact of Trump’s tariffs is not known. Inflation indicators are little changed since the tariffs were implemented in April, but various factors have colluded to blunt the impact.
Trump, though, said higher interest rates are costing the U.S. “hundreds of billions” of dollars in financing costs that could be saved if the Fed would ease.
“If he’s worried about inflation, that’s OK. I understand that. I don’t think there’s going to be any. So far there hasn’t,” Trump said.
“But now we have a man that just refuses to lower the Fed rate, just refuses to do, and he’s not a smart person,” the president added. “I don’t even think he’s that political. I think he hates me, but that’s OK.”
As CNN reported, if the Fed does lower rates later this year, it will likely be because of bad economic news:
Rising unemployment will likely be what pulls the trigger for the Federal Reserve to finally begin lowering interest rates again, economists say.
Since January, the Fed has stood on the sidelines, keeping its benchmark lending rate unchanged at about 4.4%. Officials have said in recent speeches that they want to see how President Donald Trump’s significant policy changes, including on tariffs, affect the US economy first before considering further rate cuts.
Renewed tensions in the Middle East add even more to the uncertainty that has paralyzed the central bank. Officials are expected to continue with their strategy of staying on hold at the conclusion of their two-day policy meeting on Wednesday, with an announcement at 2 p.m. ET.
But the economy could soon buckle as Trump’s tariffs begin to force shoppers to pull back on their spending, eventually sending unemployment higher as company profits take a hit. That would give the Fed, which is responsible for preserving the labor market’s strength, the signal to start lowering rates.
New economic projections from Fed policymakers could show they expect to lower rates at least once this year — and it will likely be because of bad news, economists say.
The Supreme Court recently covered its own investments with its “Fed carveout,” ruling that Trump could fire anyone he wanted, EXCEPT the Fed Chairman.