The Republican president insists on urging the central bank for a swift interest rate cut.
Donald Trump is one of those people capable of saying one thing and the opposite and claiming he is right in both. American media have given up on keeping track of his falsehoods, as they did during his first term. His word has lost value as a reference. Just days after suggesting that he was considering dismissing the president of the Federal Reserve, Jerome Powell, he stated on Tuesday that he does not intend to do so. In between, threats to the independence of the central bank heightened distrust in U.S. assets and led the dollar to trade at its lowest in three years.
'I never did that. The press rushes things. No, I do not intend to fire him. I would like him to be a little more active regarding his idea of lowering interest rates,' Trump said on Tuesday at the White House during the inauguration of the new chairman of the Securities and Exchange Commission (SEC), Paul Atkins.
Kevin Hassett, director of the National Economic Council at the White House, stated on Friday that the president and his team were still studying the possibility of dismissing the president of the Federal Reserve, Jerome Powell, just one day after Trump claimed on his social media, Truth, that 'the removal of Powell cannot come soon enough,' while urging the central bank to cut interest rates.
On the same Thursday, during a meeting with Italian Prime Minister Giorgia Meloni, he attacked the central bank president again: 'I don’t think he is doing his job well. He is always late, he is slow, and I am not happy with him. I have told him, and if I want him to go, he will go very quickly, believe me,' he said. And on Monday he returned to the charge through Truth, his social network: 'It is almost impossible to have inflation, but there can be a SLOWDOWN in the economy unless Mr. Too Late, a big loser, lowers interest rates, NOW.'
Wall Street, which had been closed since Friday, closed on Monday with significant losses, while Treasury debt yields rose and the dollar hit a three-year low against the euro.
Trump asks Powell to lower official interest rates. He did so again on Tuesday. 'We believe it is the perfect time to lower rates and we would like our president [of the central bank] to act early or on time, rather than late,' Trump stated, adding that it was not 'the end' if Powell ignored his request.
The president of the Federal Reserve has indicated that he needs 'more clarity' before resuming cuts in the cost of money. Trump's measures have complicated the work of the central bank. The Federal Reserve has a dual mandate of full employment and price stability. The trade war declared by Trump against the world threatens to raise prices and hinder job creation. Powell acknowledged last week that the economy 'is moving away' from both goals.
The U.S. economy was growing strongly, with unemployment near historic lows and inflation almost under control when Trump returned to the White House. However, now, uncertainty and instability are the dominant trend amid Trump's chaotic measures and his continuous corrections and patches. The International Monetary Fund (IMF) downgraded its growth forecast for the United States from 2.7% to 1.8% and estimated the probability of recession at 37%.