Powell Meets With Trump, A Frequent Critic, To Discuss Economy -- 3rd Update
November 18 2019 - 11:48PM
Dow Jones News
By Nick Timiraos
Federal Reserve Chairman Jerome Powell met with President Trump,
who has criticized the central bank dozens of times this year, at
the White House on Monday to discuss an economy hindered by
faltering global growth prospects.
Mr. Trump has repeatedly stated a low opinion of the job Mr.
Powell is doing, calling him a "terrible communicator" and an enemy
of the state. The president said in a statement on Twitter that the
Monday meeting was "very good and cordial."
Mr. Powell accepted Mr. Trump's invitation, and they were joined
by Treasury Secretary Steven Mnuchin, according to the Fed. They
met in the White House residence for around 30 minutes, a person
familiar with the matter said.
"Everything was discussed including interest rates, negative
interest, low inflation, easing, Dollar strength & its effect
on manufacturing, trade with China, E.U. & others, etc.," said
Mr. Trump. He later said, "I protested fact that our Fed Rate is
set too high relative to the interest rates of other competitor
countries," adding that it should be lower than theirs.
The central bank said Mr. Powell's comments to Mr. Trump were
consistent with his remarks last week. He then expressed optimism
that the Fed's interest-rate cuts this year would buoy the U.S.
economy against lingering risks, including decelerating global
growth and any fallout from uncertainty that has been amplified by
the U.S.-China trade war.
"He didn't discuss his expectations for monetary policy, except
to stress that the path of policy will depend entirely on incoming
information that bears on the outlook for the economy," the Fed
said in a statement disclosing the meeting on Monday morning.
Fed officials have cut their short-term rate three times since
July, most recently in October to a range between 1.5% and 1.75%.
Officials lowered rates to cushion the economy against the risks of
a sharp slowdown.
Mr. Trump named Mr. Powell to a four-year term that began in
February 2018. He quickly soured on his selection as the central
bank continued its campaign to slowly lift short-term borrowing
costs. It isn't unusual for the Fed leader to meet with the
president, but it is unusual for the president to repeatedly
chastise the central bank in public.
Mr. Trump's attacks on the Fed have ended a bipartisan precedent
extending to the Clinton administration in which presidents didn't
publicly direct the central bank on how to set policy. Mr. Trump
has made a habit of mocking the Fed leader on his Twitter feed,
with more than 50 posts about the Fed this year.
"They don't have a clue, but I do," Mr. Trump said last
month.
In recent months, the president has expressed his envy that some
countries with very low growth prospects in Europe have negative
interest rates. He has also lamented the relative strength of the
dollar against other currencies.
After raising interest rates four times last year, Fed officials
have reluctantly lowered interest rates this year. The reversal has
highlighted a split on the rate-setting Federal Open Market
Committee. Around half of the 12 reserve bank presidents, five of
which have a vote at policy meetings, have opposed or voiced
reservations about some or all of the cuts.
The Fed also slowed and then stopped a program to shrink its $4
trillion asset portfolio earlier this year. It ultimately reversed
that effort and began adding very-short-term Treasury debt to its
holdings last month after money market volatility in September
indicated the portfolio runoff may have gone too far.
Mr. Trump's sustained attacks on the Fed have led officials to
feel they are fighting not only to shore up the U.S. economy but
also to protect the institution's nonpolitical approach to
policy-making. The central bank has studiously guarded its
independence ever since interference by the White House in the
1960s and 1970s preceded the runaway inflation of the 1970s and
1980s.
"It's very, very important that the public understands that we
do our work on a nonpartisan, nonpolitical basis," Mr. Powell told
lawmakers last week. "We'll make mistakes. We're human. But we will
not make mistakes of character."
On Monday, Mr. Powell told Mr. Trump that the central bank's
rate-setting decisions are "based solely on careful, objective and
nonpolitical analysis," according to the Fed's summary of the
meeting.
Mr. Powell joined the Fed in 2012 after a career in private
equity and a stint in the Treasury Department under the
administration of George H.W. Bush. He has walked a delicate
balancing act in recent months in seeking to explain why the Fed
was cutting rates to support growth but that the policy wasn't in
response to Mr. Trump's demands.
The two men haven't met since Mr. Trump hosted Mr. Powell for
dinner at the White House residence in February. Mr. Trump has
spoken by phone with Mr. Powell three times this year, for around
five minutes each, most recently in May, according to Mr. Powell's
public calendar.
Unhappy with Fed rate increases and stock market declines last
December, Mr. Trump wondered aloud to his advisers about whether he
could replace Mr. Powell, according to people familiar with the
matter. His advisers later clarified that Mr. Powell's job was safe
because he couldn't be dismissed over a policy disagreement.
Mr. Trump reacted disapprovingly to Mr. Powell's comments about
the importance of the Fed's independence this summer. "He's trying
to prove how tough he is because he's not going to get pushed
around," Mr. Trump said in June. "Here's a guy, nobody ever heard
of him before and now, I made him, and he wants to show how tough
he is."
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
November 18, 2019 23:33 ET (04:33 GMT)
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