In yet another sign that President Joe Biden’s humming economy is totally unnerving Donald Trump, the Republican front-runner has begun attacking U.S. Federal Reserve chair Jerome Powell, a holdover from his own administration.
Trump’s main objection?
I think he’s going to do something to probably help the Democrats,” Trump told Fox Business in a Friday interview with Maria Bartiromo. “If he lowers the interest rates,” Trump added, in case his implication wasn’t clear.
That was Trump’s first response to Bartiromo’s question on whether the U.S. economy could experience a so-called “soft landing.”
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Trump proceeded to talk about the potential for “massive inflation” again given the developing conflict in the Middle East, which could drive up energy prices. But he quickly returned to the idea of Powell doing the political bidding of President Biden.
“It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected,” Trump said, adding, “I think he’s political.”
It’s worth noting here that Biden has mostly steered clear of discussing Federal Reserve policies. In December, Biden took the rare step of suggesting the economy was in a “sweet spot” that didn’t warrant new rate hikes. Traditionally, the Fed’s policy decisions are supposed to be weighed separately from the political impact of those decisions. It was an unspoken rule presidents typically abided by until Trump broke it in 2018. The decision of Powell, originally a Trump appointee, to raise interest rates during Trump’s tenure became a festering point of tension. Throughout 2018 and 2019, Trump repeatedly pressured Powell and the Fed to lower interest rates, which he believed would goose the economy and be good for his presidency at the time.
Now Trump is concerned Powell might start cutting rates to the benefit of his successor, juicing an economy that appears to be hitting its stride. In fact, Biden’s economy—and how it might play in the election—seems to be eating away at Trump. Over the past month, Trump has openly rooted for an economic “crash,” sooner rather than later. Trump also offered up a delusional rationale for why he is responsible for recent stock market surges taking place under Biden.
Whether the Fed cuts rates in the near future remains to be seen. Last week, Powell said the central bank would hold rates steady for now.
“We’ve made a lot of progress on inflation,” Powell told reporters at a press conference following its first policy meeting of the year. “We just want to make sure that we do get the job done in a sustainable way.”
If the Fed does lower rates, it would be another sign that the economy is on solid footing under Biden, along with driving higher stock prices and lower mortgage rates—a potential boon for the economy.
One person who saw Trump’s oncoming attacks from a mile away was economist and New York Times opinion writer Paul Krugman. We can expect howls from Trump and his allies that politics, not economics, is driving the coming rate cuts,” Krugman wrote last month, “they should be treated as the bad-faith bullying they are.
Trump has already proven he will sabotage America’s economy in every way possible over the course of this campaign. The more his legal jeopardy increases, the more urgent his attacks on Biden’s economy become.
Republished with permission from Daily Kos.