By Michael C. Bender, Rebecca Ballhaus, Peter Nicholas and Alex Leary
WASHINGTON -- President Trump escalated his attacks on Federal
Reserve Chairman Jerome Powell, saying the head of the nation's
central bank threaten 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 tell, but maybe" he regrets
nominating Mr. Powell.
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.
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?"
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 for 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 have
never 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
finances, " Mr. Trump said. Mr. Cohen 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."
Nick Timiraos contributed to this article.
Write to Alex Leary at alex.leary@wsj.com
(END) Dow Jones Newswires
October 23, 2018 20:25 ET (00:25 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.