Carlos Barria/Reuters
- The Federal Reserve cut interest rates by 0.25% on Wednesday, the first rate cut in 10 years.
- President Donald Trump has been calling on the Fed and Chairman Jerome Powell to cut rates for months.
- But the cut did not do enough to satisfy the president.
- "As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place — no inflation," Trump said.
- Visit Business Insider’s homepage for more stories.
After months of demanding that Federal Reserve Chairman Jerome Powell cut interest rates in order to boost the economy, President Donald Trump on Wednesday finally got his wish as the central bank went through with a 0.25% interest rate cut.
But based on the president’s response, the first rate cut in 10 years still wasn’t enough for him.
"What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world," Trump tweeted a few hours after the Fed decision was announced.
"As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place — no inflation. We are winning anyway, but I am certainly not getting much help from the Federal Reserve!"
Read more: The Federal Reserve just slashed interest rates for the first time since the financial crisis
The Fed made the much-anticipated decision to cut rates on Wednesday, citing weakening global economic conditions. Powell previously pointed to the uncertainty surrounding trade — particularly Trump’s trade war with China — as a reason for the need to loosen policy. The Fed also announced it would stop its sale of bonds that were accumulated during the financial crisis — what Trump referred to as "quantitative tightening" — earlier than anticipated.
In general, lowering interest rates stimulates the economy by making it cheaper for business and individuals to borrow money. Borrowers then turn around and, theoretically, spend that money in the economy and help boost growth.
But despite the stimulative move, stocks sold off sharply during Powell’s press conference as the chairman seemed to suggest that the move may be a one-off "mid-cycle adjustment," rather than a sustained cutting cycle. Though Powell later clarified that more cuts could be on the way if needed.
Clearly the more moderate approach to the rate cut by Powell during the press conference did not appease Trump’s desire for more stimulus. A senior White House official told CNBC’s Eamon Javers that Trump viewed the Fed’s move as "not enough."
Trump has campaigned for months against the Fed’s interest rate hike cycle, which began at the end of 2015. The Fed then hiked rates another eight times from 2016 through 2018.
But given Powell’s tempered tone about the possibility of future rate cuts, the President didn’t not appear satisfied.
Central bank observers have raised concerns about the president’s Fed bashing, warning that political influence on the Fed could be detrimental to the US economy. Trump’s attacks have also been criticized as an attempt to deflect blame for any economic problems that could hit the US economy in the run up to the 2020 election.
See Also:
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- Trump ally Mark Meadows rejects the president’s claims that Elijah Cummings is racist and says he works hard for Baltimore
Source: Business Insider – bbryan@businessinsider.com (Bob Bryan)