Trump assails Fed as the 'only problem our economy has’
By JOSH BOAK
AP Economics Writer
President Donald Trump lashed out at the Federal Reserve on Monday after administration officials spent the weekend trying to assure the public and financial markets that Jerome Powell’s job as Fed chairman was safe.
“The only problem our economy has is the Fed,” the president tweeted Monday. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch — he can’t putt!”
On Wall Street, stocks had already been down but intensified their fall after Trump’s tweet. Markets are facing their worst month in a decade over fears about a U.S. trade war with China, a slowing global economy and chaos in the Trump White House. By the close of a holiday-shortened trading session Monday, the Dow Jones Industrial Average had sunk 653 points for the day — 2.9 percent.
Trump’s latest tweet attacking the Fed was met with concern that any effort to diminish Powell or remove him as chairman could destabilize the economy.
“He is seeking open warfare on Christmas Eve,” said Peter Conti-Brown, a financial historian at the Wharton School of the University of Pennsylvania. “We’ve never seen anything like this full-blown and full-frontal assault. This is a disaster for the Fed, a disaster for the president and a disaster for the economy.”
The president has expressed frustration over the Fed’s decision to raise its key short-term rate four times this year. Those moves are intended to prevent the economy from overheating at a time of brisk growth and an unemployment rate near a half-century low.
At a news conference last week, Powell explained that the rate hikes were evidence of the economy’s strength. But Trump sees the increases — which lead to higher borrowing costs for consumers and businesses — as an economic and political threat.
The president’s attacks are widely seen as an intrusion on the political independence of the Fed, which exists to determine the flow of money based off economic data on employment and inflation.
Fed independence has long been among the bedrocks of the U.S. financial markets. It ensures that central bankers can make politically unpopular decisions, such as fighting high inflation in the 1980s or rescuing banks after the 2008 financial crisis.
Sen. Richard Shelby of Alabama, a senior Republican on the Banking Committee, has cautioned against removing Powell.
“I’d be very careful doing that,” Shelby told reporters Saturday at the Capitol. “The Federal Reserve is set up to be independent.”