Trump Calls for a Big Fed Rate Cut, Again Criticizes Central Bank Chairman -- 2nd Update
August 19 2019 - 2:03PM
Dow Jones News
By Rebecca Ballhaus and Paul Kiernan
WASHINGTON -- President Trump on Monday called for the Federal
Reserve to sharply cut interest rates and again criticized the
central bank's chairman for a "horrendous lack of vision," while
reiterating his belief that the U.S. economy is strong.
The president said in a pair of tweets Monday morning that the
Fed should cut its benchmark interest rate by at least a full
percentage point and resume its crisis-era program of buying bonds
to lower long-term borrowing costs. Such moves would typically be
considered only when the economy faces serious peril, which Fed
officials don't believe to be the case.
In his latest criticism of Fed Chairman Jerome Powell, who goes
by Jay, Mr. Trump said Monday that the U.S. economy "is very
strong, despite the horrendous lack of vision by Jay Powell and the
Fed."
If the Fed cut its benchmark rate by at least a percentage point
and perhaps launched a new bond-buying program, the president
tweeted, "our Economy would be even better, and the World Economy
would be greatly and quickly enhanced."
Last month, the Fed trimmed rates by a quarter percentage point
to a range between 2% and 2.25%, citing risks from slower global
growth and unexpectedly soft inflation. Mr. Powell is navigating
the Fed toward more rate reductions and is scheduled to speak
Friday at the Kansas City Fed's annual conference in Jackson Hole,
Wyo.
Investors are hoping Mr. Powell will provide more insight into
his policy approach at a time when the economic outlook is buffeted
by heightened risks and as the Fed is being publicly attacked to a
degree that is virtually without precedent in its 105-year
history.
Market participants aren't expecting a rate cut of the magnitude
Mr. Trump called for Monday, which hasn't happened since the global
financial crisis in late 2008.
Interest-rate futures are pricing in a 95% chance that the Fed
will reduce rates by a quarter percentage point at its Sept. 17-18
meeting. The probability of the benchmark federal-funds rate being
lowered by a full percentage point before the end of the year is
estimated at 2.2%, according to CME Group.
Mr. Trump's Twitter dispatch Monday came after he returned from
a 10-day vacation at his golf resort in Bedminster, N.J., during
which financial markets experienced wild swings and the Dow Jones
Industrial Average suffered its biggest single-day loss of the
year.
While the president and his advisers have blamed the swoon on
the Fed pushing interest rates too high last year, many economists
and executives say Mr. Trump's own trade policies are responsible
for spooking financial markets, hurting business investment and
weakening the global economy. Before Mr. Trump's Aug. 1
announcement of the latest round of tariffs on Chinese goods, the
Dow was less than 1% below its all-time high.
Write to Rebecca Ballhaus at Rebecca.Ballhaus@wsj.com and Paul
Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
August 19, 2019 13:48 ET (17:48 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.