Investing.com - U.S. President Donald Trump sent yet another shot across the Federal Reserve’s bow on Wednesday, calling on it for a "BIG CUT" in interest rates just two days ahead of a hotly-anticipated appearance by Chairman Jerome Powell at the Fed's Economic Symposium in Jackson Hole.
“The only problem we have is Jay Powell and the Fed,” he said. “Big U.S. growth if he does the right thing: BIG CUT, but don’t count on him!”
Trump accused the Fed of getting its policy wrong, complaining that "have a far lower interest rate, and we should be lower than them."
He said growth was being hurt by what he inaccurately claimed was “highest dollar in U.S. history”. The dollar index, which tracks the greenback against a basket of developed-market peers, is currently at 98.06 - below when he was elected and some 20% below its last major peak in 2002. It's also only 3% higher against the Chinese yuan than it was a decade ago, despite a decade of Chinese inflation running much higher than U.S. inflation.
Trump has repeatedly called for looser monetary policy amid signs that the economy may be slowing as the impact of his 2017 tax cut fades. Gross domestic product growth slowed to an annualized rate of only 2.1% in the second quarter, its slowest in two years.
Fed officials have repeatedly insisted that the central bank is independent and will not respond to political pressure.
Even so, the central bank pulled an about face in July and cut interest rates for the first time in a decade, pointing to the uncertain economic outlook, citing the ongoing trade conflict with China and subdued inflation. It angered Trump by labeling the cut as a "mid-cycle adjustment" rather than the start of a series of rate cuts. Two of its policy-makers voted against the measure, arguing that the economy is still robust.
Markets expect the Fed to cut by another 25 basis points at its next meeting in September. Trump, however, has called for a reduction of a full percentage point and suggested that further quantitative easing could be a good idea.
Trump had opposed the quantitative easing policy of former Fed chair Ben Bernanke while Barack Obama was still President.