Trump blasts Fed chief, saying 'Who is our bigger enemy?'

President Donald Trump at the White House in 2017 with his then nominee for Federal Reserve chairman, Mr Jerome Powell.
President Donald Trump at the White House in 2017 with his then nominee for Federal Reserve chairman, Mr Jerome Powell.PHOTO: REUTERS

WASHINGTON • United States President Donald Trump has launched a furious and highly personal Twitter attack against the Federal Reserve and its chairman Jerome Powell, fuming that the Fed once more "did nothing!" and wondering who is "our bigger enemy" - Mr Powell or China's leader.

The outburst came after Mr Powell, speaking to central bankers in Jackson Hole, Wyoming, gave vague assurances that the Fed "will act as appropriate" to sustain the nation's economic expansion. While the phrasing was widely seen as meaning interest rate cuts, he offered no hint of whether or how many reductions might be coming the rest of the year.

Mr Powell had barely finished speaking before Mr Trump escalated his criticism of the Fed, which he has repeatedly accused of keeping rates too high. For months, the President has ridiculed Mr Powell, the man he picked to lead the Fed.

"As usual, the Fed did nothing!" Mr Trump tweeted on Friday, adding, "We have a very strong dollar and a very weak Fed."

He went further by saying: "My only question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?" - a reference to China's President Xi Jinping. Mr Trump later corrected the spelling of Mr Powell's name.

Asked by reporters late on Friday if he wanted Mr Powell to resign, Mr Trump responded: "Let me put it this way: If he did I wouldn't stop him." Mr Powell has said he has no intention of resigning before his four-year term is up.

Dr David Jones, a leading historian of the Federal Reserve, said the "enemy" remark set an unfortunate precedent.

 

"This challenges something that has been sacred in the history of the world's most successful central bank," said Dr Jones, an author of four books on the Fed. "The central banks that have been successful are those which are independent of political pressures and were free to make the appropriate monetary policy."

The law creating the Fed says its officials can be "removed for cause" by a president. While that issue has never arisen in regard to a Fed official, the courts ruled decades ago that "for cause" means more than a policy disagreement with a president.

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A version of this article appeared in the print edition of The Sunday Times on August 25, 2019, with the headline 'Trump blasts Fed chief, saying 'Who is our bigger enemy?''. Print Edition | Subscribe