WASHINGTON (AFP) – U.S. President Donald Trump on Wednesday continued to hammer the Federal Reserve, demanding more stimulus to boost the economy as the 2020 elections approach.
Even as stocks and bond yields worldwide fell amid concern about Trump’s escalating trade war with Beijing, he accused the U.S. central bank of being a bigger threat to the American economy than China.
“They must cut rates bigger and faster and stop their ridiculous quantitative tightening NOW,” he said on Twitter, just a week after the US central bank cut the benchmark lending rate for the first time in more than a decade.
“Incompetence is a… terrible thing to watch, especially when things could be taken care of sooo easily,” Trump said in his screed.
In a series of tweets, he noted that overnight three central banks — those in India, Thailand and New Zealand — had cut rates. Those countries are likely to feel the impact of a slowing Chinese economy and a decline in trade.
Federal Reserve Chair Jerome Powell cited the trade uncertainty as a factor in the decision to cut U.S. lending rates after four increases last year, amid worries about a slowing global economy.
“Our problem is not China — We are stronger than ever, money is pouring into the US …,” Trump said. “Our problem is a Federal Reserve that is too … proud to admit their mistake of acting too fast and tightening too much (and that I was right!).”
Trump has used the strong US economy as a major selling point in his bid for a second four-year term and has benefitted from the support of Republicans despite a myriad of controversies and foreign policy failures.
Hardline White House trade advisor Peter Navarro on Tuesday said the Fed should cut as much as a full percentage point from the key interest rate to reverse the increases made last year as the economy was in a strong recovery.
But a key central bank policymaker, St. Louis Federal Reserve Bank President James Bullard, told AFP on Tuesday that benchmark US lending rates were “in the right neighborhood,” seeming to push back against another immediate rate cut or even a long series of cuts that Trump wants.
Trump regularly points to the stock market as proof his policies are helping the economy, but, with Wall Street down as much as 500 points early Wednesday, he shifted gears.
“I think the market reaction is to be expected. I might have expected even more,” Trump told reporters at the White House. “At some point as I just said we have to take on China.”
The uncertainty is not limited to the United States and China and with a British exit from the European Union looming, investors worldwide fled riskier assets into bonds, raising bond prices and plunging returns on many debt issues into the negative.
In Europe, the move was sparked after Germany reported industrial production had fallen much more than expected in June, with declines across the board in capital, consumer and producer goods, heightening fears of a recession in Europe’s largest economy.
© Agence France-Presse