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Trump Steps Up Attacks on Fed Chairman Powell

The Wall Street Journal. logo The Wall Street Journal. 10/24/2018
Donald Trump wearing a suit and tie © T.J. Kirkpatrick for The Wall Street Journal

WASHINGTON—President Trump escalated his attacks on Federal Reserve Chairman Jerome Powell, saying the head of the nation’s central bank threatened U.S. economic growth and appeared to enjoy raising interest rates.

In an interview Tuesday with The Wall Street Journal, Mr. Trump acknowledged the independence the Fed has long enjoyed in setting economic policy, while also making clear he was intentionally sending a direct message to Mr. Powell that he wanted lower interest rates.

“Every time we do something great, he raises the interest rates,” Mr. Trump said, adding that Mr. Powell “almost looks like he’s happy raising interest rates.” The president declined to elaborate, and a spokeswoman for the Fed declined to comment.

Mr. Trump said it was “too early to say, but maybe” he regrets nominating Mr. Powell.

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Fed officials have raised their benchmark rate three times this year, most recently in September to a range between 2% and 2.25%, and most officials expect to raise it again at their December meeting. Mr. Powell has said the Fed wants to raise rates at least to a so-called neutral level that seeks to neither spur nor slow economic growth.

The president’s caustic comments about Mr. Powell came as Mr. Trump repeatedly described the economy in personal terms. He referred to economic gains during his time in office as “my numbers,” saying, “I have a hot economy going.” He described his push for growth as a competition with former President Obama’s record, saying that increases under his Democratic predecessor were skewed because of low-interest rates.

Related video: Three Reasons the Fed Is Raising Interest Rates


In the 30-minute interview in the Oval Office, Mr. Trump also touched on his approach to tariffs, the controversy unfolding over the death of Saudi Arabian dissident Jamal Khashoggi, his eagerness to pass a second tax cut, and his thoughts on his former attorney, Michael Cohen.

Asked an open-ended question about what he viewed as the biggest risks to the economy, Mr. Trump gave a single answer: the Fed.

“To me the Fed is the biggest risk, because I think interest rates are being raised too quickly,” the president said just before he pushed a red button on his desk, summoning an iced cola delivered to him on a silver platter.

Mr. Trump said that higher interest rates add to the debt and would act as a drag on economic growth. He said he preferred to take the savings from lower interest rates to pay down the debt. “But how do you do that when he keeps raising interest rates on you?”

With the economy expanding solidly, unemployment falling and inflation running at the Fed’s 2% target, the Fed has been gradually raising rates to guard against the risk of unsustainable growth, which could show up in the form of higher inflation or financial bubbles.

Asked why he thought Mr. Powell was raising rates, Mr. Trump paused, then said, “He was supposed to be a low-interest-rate guy. It’s turned out that he’s not.”

Mr. Trump demurred when asked under what circumstances he’d remove Mr. Powell, who he selected for a four-year term that started in February. “I don’t know,” he said. “I’m just saying this: I’m very unhappy with the Fed because Obama had zero interest rates.”

He said the Fed was supposed to be independent “in theory,” but said his instinct was that interest rates are being raised too quickly.

Citing the rate increases, Mr. Trump said, “How the hell do you compete with that? And Obama — remember this, it’s very important — Obama had zero interest,” the president said.

The Fed held interest rates at ultralow levels for years after the financial crisis amid anemic growth both in the U.S. and abroad, and began slowly lifting rates in December 2015.

The law isn’t clear about whether Mr. Trump could dismiss Mr. Powell even if he wanted to do so. The Federal Reserve Act, as amended in 1935, says Fed governors can be removed by the president “for cause.” The stipulation applies to the board’s governors, who serve 14-year terms, and not to the Fed chairman, who serves a four-year term concurrent with a 14-year term as governor.

The Fed has enjoyed relative independence in setting policy because it is charged by Congress with making sometimes-unpopular decisions, such as when to raise rates. Before Mr. Trump, the last president to publicly call for lower interest rates was George H.W. Bush. He blamed Alan Greenspan’s decision not to keep rates lower after the 1990-1991 recession for contributing to his election defeat in 1992.

White House attacks on the Fed could take on more significance if they’re echoed by congressional lawmakers because the Fed ultimately answers to Capitol Hill. That hasn’t occurred since Mr. Trump took office.

“I am generally impressed with Chairman Powell’s leadership,” said Rep. Jeb Hensarling (R., Texas), the chairman of the House Financial Services Committee, in an interview Tuesday. He said the Fed’s current interest-rate “trajectory seems to be headed in a good direction.”

Mr. Trump said he views tariffs, which have been a centerpiece of his “America First” economic and trade agenda in his first two years in office, as a negotiating tactic and vastly understated the size of the tariff regime put in place by his administration.

“We don’t even have tariffs. I’m using tariffs to negotiate,” the president said, describing the tariffs on steel and aluminum he imposed this year as “small.”

The U.S. this year imposed tariffs on steel, aluminum, washers and solar panels, as well as tariffs on an additional $250 billion of Chinese imports. Some businesses have supported the tariffs, but many have said they hurt their profits and could lead to higher prices for customers.

“Where do we have tariffs? We don’t have tariffs anywhere,” Mr. Trump said when asked about the risks tariffs pose to the economy. “You know what happens? A business that’s doing badly always likes to blame Trump and the tariffs, because it’s a good excuse for some incompetent guy that’s making $25 million a year.”

He said the threat of tariffs had helped his administration renegotiate the North American Free Trade Agreement as well as begin talks for a trade deal with the European Union. “I could never have done it without tariffs,” he said of the U.S.-Mexico-Canada Agreement, the revised Nafta deal that the three nations reached earlier this month, but which requires approval from Congress.

“I’m talking tariffs, I’ll use tariffs,” he said. “I mean it.”

On Mr. Cohen, Mr. Trump said the lawyer who served him for more than a decade was “like a public relations person” who “represented me on very small things.”

In August, Mr. Cohen pleaded guilty to charges including campaign-finance violations and said Mr. Trump had ordered him to arrange payments to two women during the campaign, implicating the president in a federal crime.

Mr. Trump said he was “surprised” when he learned that Mr. Cohen had taped a conversation they had, which was aired by CNN in July. Mr. Trump said the tape of the September 2016 conversation—in which he and Mr. Cohen discussed buying the rights to a former Playboy model’s story of having sex with Mr. Trump—was “meaningless.” They ultimately didn’t go through with the purchase.

“It’s unthinkable that a lawyer would tape a client, that a lawyer would make statements,” Mr. Trump said. “He shouldn’t do that. I’m surprised that he did it.”

Mr. Trump also sought to distance himself from the federal investigation into Mr. Cohen, which has broadened to examine business dealings by the Trump Organization, according to people familiar with the matter. “Nothing to do with me,” the president said.

“This was having to do with the taxi industry or something, and financing,” Mr. Trump said. Mr. Cohen also pleaded guilty to evading taxes on income from his taxi-medallion business and other areas.

Mr. Trump added that other tapes Mr. Cohen kept of his conversations—which were seized by prosecutors in an April raid of the former Trump lawyer’s properties—were “unbelievably complimentary to me.”

Write to Michael C. Bender at, Rebecca Ballhaus at, Peter Nicholas at and Alex Leary at


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