No country should have lower interest rates than the US, President Donald Trump said on Sunday, days before the Federal Reserve’s next policy meeting.
Speaking to reporters at the Irish Open golf tournament, Trump said he did not know whether Fed policymakers will raise interest rates at their meeting this week. But he said the US “should be paying the lowest interest rate in the world” no matter what the Federal Reserve’s data indicates about inflation and the economy.
The Labor Department’s Consumer Price Index, a key measure of underlying inflation, on Friday posted its largest increase in four months. That reinforced expectations that the US central bank will raise the target range for its federal funds rate, now at 3.5 per cent to 3.75 per cent, at the conclusion of its Federal Open Market Committee meeting on Wednesday.
Price pressures remain elevated as the economy deals with Trump’s import tax increases and surging energy prices tied to the Iran war. Many at the Fed worry that the longer inflation remains high, the greater the cost will be to get it back to target.
The central bank’s governors are meeting just weeks before midterm elections that will determine whether Republicans keep their slim majorities in both chambers of the US Congress. A rate hike could add to voter concerns about affordability, according to recent Reuters/Ipsos polls.
Trump’s approval ratings have fallen as inflation has persisted. He has argued that the Fed’s interest rate levels have helped other countries at the expense of the US
“I know more about formulas than anybody, and with the best credit in the world, we make other countries rich,” Trump said on Sunday.
The president, a frequent critic of former Fed Chair Jay Powell, has been more supportive of Fed leadership since his own pick for chair, Kevin Warsh, took charge earlier this year. But Trump recently has made his demands more clear.
“LOWER THE RATE OR I’LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT,” Trump posted on social media two weeks ago.
In additional remarks to reporters later on Sunday before he boarded a plane to return to the US, Trump reiterated that threat and said: “We don’t want to have deficits with nations. We want to have surpluses or at least break-evens.”
Trump “will defend the independence of Kevin Warsh above all” no matter what the Fed does with interest rates, National Economic Council Director Kevin Hassett told “Fox News Sunday.”
But Hassett also underscored Trump’s own preferences, saying that if the Fed raises rates, “I’m sure he’s not going to be super happy about it.”
