Trump says he ‘made a lot of money’ so he should have a say in when you get a rate cut
“I feel the president should have at least a say in there. I feel that strongly,” Trump said toward the end of his press conference. “I made a lot of money. I was very successful. And I think I have a better instinct than, in many cases, people that would be on the Federal Reserve — or the chairman.”
The former president said that Fed Chair Jerome Powell, whom Trump appointed to the position in 2017, has got the timing of rate moves wrong throughout his tenure.
“He’s tending to be a little bit late on things. He gets a little bit too early and a little bit too late,” Trump said. “I believe it’s really a gut feeling.”
Trump appeared to be joining a growing chorus, including economists and market participants, who believe Powell and the Fed blew it last week when it opted not to cut rates from a 23-year high at the conclusion of its policy meeting on July 31. Two days later, the US Bureau of Labor Statistics reported that the US economy added a disappointing 114,000 jobs and the unemployment rate shot up to 4.3%.
That worse-than-expected jobs report sent the stock market into a tizzy, igniting fears that the Fed waited too long to cut rates. It takes time for rate hikes or cuts to take effect in the economy, so timing a policy decision right is a tricky game that the Fed historically has failed to win.
Still, Trump has recently advocated against a rate cut before the election, saying such a decision from the Fed would be a gift to the Democratic party. Rate cuts tend to reduce borrowing costs for consumers and businesses, freeing up cash to to spend and boosting the economy. In the Fed’s yearslong battle with surging inflation, it hiked rates to slow the economy and bring prices under control. It has largely accomplished that goal.
Trump has publicly feuded with Powell for years, frequently posting on social media that he disagreed with the Fed’s decision to raise rates in Powell’s pre-Covid rate-hiking campaign.
“I had it out with him a couple of times very strongly,” Trump said Thursday. ”I fought him very hard. And actually we get along fine, we get along fine.”
Trump publicly praised Powell for cutting rates to zero in March 2020, when the Fed made two extraordinary emergency rate cuts to keep the economy from collapse in the early days of the pandemic.
Presidents frequently gripe about Fed policy, but Trump’s public pressure campaign is in a league of its own. The Fed is designed to be an independent governing body, free from political influence, so that it cannot be bullied into making emotional decisions that could upset the delicate balance of job creation and low inflation. Sometimes, a central bank is forced to make unpopular decisions — and when politics play a role, as they have recently in Turkey, for example — inflation can surge out of control or economies can tank.
Despite their tense relationship, Powell has routinely declined to comment on Trump’s attempts to wield influence, saying the Fed will remain independent and undeterred in its mission.
And for what it’s worth, Trump said in a Bloomberg interview last month that he would not fire Powell if he were to be reelected president, “especially if I thought he was doing the right thing.” But Trump has said he will not reappoint Powell in 2026 at the end of his term.
The former president's comments about the Fed's rate decisions impact on business and the economy, as he believes Powell tends to miss the optimal timing. Rate cuts can benefit businesses by reducing borrowing costs and boosting economic growth, a policy the Fed used during the pandemic.
