President Donald Trump said Monday the US central bank has been “very, very destructive” to the economy by raising interest rates too quickly.
Trump has repeatedly criticized the Federal Reserve and called on the independent policymakers to lower the benchmark interest rate but he said in an interview with CNBC “they certainly didn’t listen to me because they made a big mistake. They raised interest rates far too fast.”
He said the Fed has put him at a disadvantage in the trade conflict with China, where President Xi Jinping can direct the central bank and offset the impact of the tariffs Trump imposed on $250 billion in Chinese goods.
“We should be entitled to have a fair playing field, but even without a fair playing field — because our Fed is very, very destructive to us — even without a fair playing field, we’re winning, because the tariffs are putting us at a tremendous competitive advantage,” he said.
Fed Chairman Jerome Powell has consistently said the independent central bank does not allow political pressure to sway its decisions.
The Fed, which will announce its next policy decision next week, increased the key policy rate four times last year, but Powell this year has stressed that they will be patient to see how the economy develops, especially given the impact of Trump’s trade war with China.
However, as the US economy shows signs of slowing, more and more economists — and one voting member of the Fed’s policy committee — now say the next move will be to cut rates to support growth, possibly this year.
“Don’t forget, the head of the Fed in China is President Xi. He’s the president of China. He also is the head of the Fed. He can do whatever he wants,” said Trump, who has named three of the five Fed board members to their posts, including Powell.
The US leader continues to claim the tariffs, which he has used as a weapon in disputes over trade policy, national security and immigration, “are a beautiful thing” because they are payments from a foreign government that are a boon to US coffers, when in fact they are paid by US consumers and businesses.
But even so “China is getting absolutely decimated” by US actions, he said.