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Trump Compares Federal Reserve To 'Stubborn Child'

Benzinga logo Benzinga 6/24/2019 Wayne Duggan
Donald Trump wearing a suit and tie© Provided by Accretive Capital LLC

The Federal Reserve opted not to cut interest rates last week, and President Donald Trump is once again expressing his displeasure with the Fed and his appointed Fed Chair Jerome Powell. Trump lashed out at the Fed Monday on Twitter, telling followers the Fed “doesn’t know what it’s doing.”

The latest tweets come after Trump ripped Powell specifically in a new interview with NBC.

“I’m not happy with his actions,” Trump said of Powell. “No, I don’t think he’s done a good job.”

Ignoring The President

Trump, who was also highly critical of Powell’s predecessor Janet Yellen, appointed Powell as head of the Fed in November 2017.

Despite repeated calls by Trump for lower interest rates, the Fed chose last week to maintain its rates and reject the president’s calls.

“Well, let’s see what he does,” Trump said just prior to the Fed announcement when asked whether he plans to remove Powell from his position.

Powell has repeatedly said he has no intention of leaving his position, implying that Trump cannot legally remove him. Powell has said he can only be removed from his position for just cause.

“The law is clear that I have a four-year term, and I fully intend to serve it,” Powell said last week.

National Economic Council Director Larry Kudlow said last week that, while Trump may be unhappy with Powell, he is not considering a demotion.

Investors React

The battle in Washington over interest rates has a direct impact on investors. Lower rates help stimulate the economy by facilitating the borrowing needed to invest in growth.

Yet higher interest rates give the Fed more flexibility to combat and potentially avoid the next recession, and rate cuts potentially leave the Fed with limited options should the market take a nosedive.

So far in 2019, investors haven’t been concerned about rising interest rates.

The SPDR S&P 500 ETF Trust (NYSE: SPY) is up 17.7% year-to-date. Investors also don’t seem to agree with Trump’s assessment of the Fed’s latest decision. The SPDR Dow Jones Industrial Average ETF (NYSE: DIA) is up 1.1% since last week’s Fed announcement.

Related Links:

Federal Reserve Leaves Rates Unchanged; Bullard Dissents

Making The Case For A June Fed Rate Cut

President Donald Trump in the Oval Office on Thursday, June 20. White House photo.

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