President Donald Trump intensified pressure on the Federal Reserve to lower interest rates, threatening to cut off trade with certain economies with which the US has a deficit if the central bank doesn’t act.
Trump issued his demands Friday in a lengthy social media post after a stronger-than-expected August jobs report, which could bolster the case for Fed officials to raise rates at their next policy meeting starting Sept. 15.
In his post, the president exhorted his hand-picked Fed Chairman Kevin Warsh, whom he called “great,” and board members to “get smart” and “BE PATRIOTS for a change.”
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump posted. “High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!”
Trump said the US Supreme Court, which struck down his previous tariff regime, had acknowledged his authority to do that. But if he moves forward with trade embargoes, it would almost certainly trigger a legal challenge.
It’s unclear how such an action would help lower US borrowing costs.
The message shows that Trump is running out of patience with the Fed just months after Warsh took over from Jerome Powell, whom the president routinely attacked over the bank’s policy decisions.
Trump had pulled back on his pressure campaign against the Fed after Warsh became chair, but the post amounts to a resumption of it.
The president’s approval ratings have plummeted ahead of November’s midterm elections, as polls show Americans have panned his handling of the cost of living and the war in Iran.
Jobs growth unexpectedly surged in August, with non-farm payrolls adding 162,000 positions, and the unemployment rate held steady.
Investors boosted bets on a rate hike at the Fed’s upcoming meeting in response.
The president went even further than his top White House economic adviser, Kevin Hassett, who earlier Friday said that the jobs numbers strengthened the case to keep interest rates the same.
“We respect the Fed’s independence, but I think the argument for holding steady would be pretty strong,” Hassett said on CNBC.
Woodhouse writes for Bloomberg.
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