Donald Trump said on Sunday that no country should have lower interest rates than the US, days before a Federal Reserve meeting, as National Economic Council Director Kevin Hassett played down Trump's trade-war threat. In remarks carried by The Hill, Hassett said "I don't expect the trade's going to go to zero," adding that the president "has a very strong opinion" on interest rates.
What did the president say in Ireland? Speaking to reporters at the Irish Open golf tournament in Doonbeg, Trump said he did not know whether Fed policymakers would raise rates this week, but that the US "should be paying the lowest interest rate in the world" whatever the Fed's data shows about inflation, CNA reported. He has said the Fed's rate levels have helped other countries at the expense of the US: "I know more about formulas than anybody, and with the best credit in the world, we make other countries rich." Two weeks ago he posted on social media: "LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT." Before boarding his flight home later on Sunday, he repeated that threat: "We don't want to have deficits with nations. We want to have surpluses or at least break-evens."
What is the Fed expected to do? The Labor Department's Consumer Price Index posted its largest increase in four months on Friday, reinforcing expectations that the Fed will raise the target range for its federal funds rate, now 3.5 to 3.75 per cent, when its policy meeting concludes on Wednesday, CNA reported. Price pressures remain elevated as the economy deals with Trump's import tax increases and surging energy prices tied to the Iran war. The meeting comes weeks before midterm elections that will determine whether Republicans keep their slim majorities in both chambers of Congress, and recent Reuters/Ipsos polls show a rate hike could add to voter concerns about affordability. Trump's approval ratings have fallen as inflation has persisted.
What else did Hassett say? Hassett, whose Fox News Sunday interview CNA reported, said Trump "will defend the independence of Kevin Warsh above all" whatever the Fed does on rates. Trump, a frequent critic of former Fed Chair Jay Powell, has been more supportive of Fed leadership since his own pick, Warsh, took charge earlier this year, though he has recently made his demands clearer. Hassett also said that if the Fed raises rates, "I'm sure he's not going to be super happy about it."
Figures referenced: Donald Trump. — JudgeMarket.
