Trump is not happy with the Fed’s decision to hold rates steady today.
Trump Slams Fed
NBC reports Trump Slams Fed After Decision to Hold Interest Rates Steady.
President Donald Trump took Federal Reserve officials to task after they left interest rates unchanged following their first policy meeting since he resumed office.
“Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing,” he wrote on his Truth Social platform, referring to Federal Reserve Chair Jerome Powell.
“If the Fed had spent less time on DEI, gender ideology, ‘green’ energy, and fake climate change, Inflation would never have been a problem,” he said.
Trump on Truth Social
Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it by unleashing American Energy production, slashing Regulation, rebalancing International Trade, and reigniting American Manufacturing, but I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again! The Fed has done a terrible job on Bank Regulation. Treasury is going to lead the effort to cut unnecessary Regulation, and will unleash lending for all American people and businesses. If the Fed had spent less time on DEI, gender ideology, “green” energy, and fake climate change, Inflation would never have been a problem. Instead, we suffered from the worst Inflation in the History of our Country!
Plenty to Blame the Fed For
There’s plenty to blame the Fed for, but Climate Change isn’t one of them, nor is the decision to hold rates steady.
The Fed destroyed the housing market with inept QE policy coupled with holding rates too low too long. Those are repeat policy errors.
But the Fed has spent zero time on climate change, telling Elizabeth Warren it was not part of the Fed’s mandate.
Post-FOMC Press Conference
I listened to the Post-FOMC press conference and reporters asked Powell at least six questions regarding Trump’s policy.
Powell refused to answer a single question about what immigration, tariffs, or budget deficits might do to inflation.
Powell gave one reporter a “mulligan” and told him to ask another question. The rest got boiler-plate answers on inflation slowly coming down.
Trump Knows More Than the Fed
“I know interest rates much better than they do,” Trump said last week of Fed officials — shortly after telling the World Economic Forum in Davos, Switzerland, by videoconference that he’d “demand that interest rates drop immediately.”
I discussed the Davos command on January 23: Trump “Will Demand Interest Rates Drop Immediately”
Trump fails to understand that unless the Fed corners the entire bond market, long-term interest rates will rise if the Fed cuts rates prematurely.
Yield on the long end of the curve and mortgage rates have both risen about a full point since the Fed started cutting rates.
On January 28 I noted New Orders for Durable Goods Down 4 of 5 Months, Autos Down 6 of 7 Months
And on January 29 Trump Announces New Tariffs on Computer Chips and Semiconductors
Those posts are all troubling. One cannot “demand” lower interest rates and expect to get them.
And going after Taiwan is a serious policy error. It’s not like we can get advanced chips anywhere else. US customers would pay more than anyone else in the world for chips, and computers too.
If Trump wants interest rates to come down, he is going to have to reduce the budget deficit. The bond market doesn’t believe that and neither do I.