In the archaic world known as the Federal Reserve Bank, an iron grip is usually held on the money supply. It’s a game of chicken, to an extent with raising and lowering the rates that banks have to pay in interest. Too much and the brakes go on the economy, something that President Donald Trump knows darn well and good and wants to prevent at all costs.
What Trump really wanted at this point in his presidency was a drop in interest rates to make money more fluid.
On Wednesday, he got it.
As CNN reported, “Policymakers led by Fed Chairman Jerome Powell voted 8-2 in favor of a small cut in the federal funds rate, and recommitted to their promise to ‘act as appropriate’ to sustain the country’s longest economic expansion in history.”
Powell explained, “The outlook for the U.S. economy remains favorable and this action is designed to support that outlook. It is intended to ensure against downside risks from weak global growth and trade policy uncertainty, to help offset the effects these factors are having on the economy, and to promote a faster return of inflation to our 2% objective.”
CNBC reported, “In approving the cut, the FOMC cited ‘implications of global developments for the economic outlook as well as muted inflation pressures.’ The committee called the current state of growth ‘moderate’ and the labor market ‘strong,’ but decided to loosen policy anyway.”
President Trump took to Twitter and a victory lap of sorts ensued.
Asked about the Fed’s move on Wednesday, Trump replied that lowering rates so they rest between 2% and 2.25% didn’t go far enough. He stated:
The Fed move, in my opinion, far too early and far too severely; it puts me somewhat at a disadvantage. Fortunately I’ve made the economy so strong that nothing’s going to stop us. But the Fed could have made it a lot easier; I would like to see a large cut and I’d like to see immediately the quantitative tightening stop. It should be stopped. For them to do quantitative tightening and also higher interest rates simultaneously, I think was a big mistake. I also think that had they not done it, as good as we’ve done, we’ve hit a record, as you will tell, as you will say, in the stock market. We had an all-time high in the history of the stock market; I think I would have been 10,000 points higher and I think we would have been in the 4’s with GDP.
That being the case, whose side is the Federal Reserve on?