Powell meets Trump to discuss US economy

| Updated on: Nov 19, 2019

Federal Reserve Chairman Jerome Powell (file photo) | Photo Credit: JOSHUA ROBERTS

President Donald Trump said he “protested” US interest rates that he considers too high relative to other developed countries in a meeting on Monday with Federal Reserve Chairman Jerome Powell.

Powell met with Trump and and Treasury Secretary Steven Mnuchin at the White House residence in the morning at the President’s request to discuss the economy. It was the second face-to-face encounter this year between Trump and Powell amid the President’s relentless criticism of the US central bank.

At my meeting with Jay Powell this morning, I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries. In fact, our rates should be lower than all others (we are the US). Too strong a Dollar hurting manufacturers & growth!

Powell’s comments “were consistent with his remarks at his congressional hearings last week,” the Fed said in a statement released after the meeting, pointing out that the gathering was at the president’s invitation. Trump has made his economic record the center piece of his bid for re-election next year and with his criticism.

His attacks, including an August tweet asking “Who is our bigger enemy, Jay Powell or Chairman Xi?,” referring to China’s president, have shattered a decades-long White House tradition of avoiding public comment on monetary policy out of respect for the Fed’s independence.

Powell “did not 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.

Trump subsequently tweeted that they had had a “very good & cordial meeting” and had discussed a range of issues including “interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, EU & others, etc.” He followed that with another tweet late Monday night, referring to his “protesting” of rates.

The dollar dropped to a session low amid gains in the euro after the news hit that negative interest rates had been among their topics of conversation.

Powell last week called the US economy a “star” performer and voiced solid confidence that its record expansion will stay on track. He and other Fed officials have consistently said that European or Japan-style negative interest rates would not be appropriate in the U.S.

The chairman’s remarks on the economy reinforced a sense that officials judge they have done enough to keep the economy on track after three rate cuts this year, and monetary policy is now on a prolonged hold as long as the outlook remains favourable.

Trump has publicly raged against Powell and the Fed for months, complaining about its rate increases during 2018 and continuing to pound the central bank this year even as it has cut rates to keep a record US expansion on track, as the president seeks to deflect blame for slowing growth that many have pinned on his trade war with China.

With less than a year until the 2020 vote, the world’s largest economy has been generally holding up this year on resilient consumption. Gross domestic product increased at a 1.9% annualised rate in the third quarter, though that was down from 2% in the second quarter and 3.1% in the opening three months of the year.

Published on November 19, 2019
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