President Trump Criticizes Federal Reserve For Raising Interest Rates
MARY LOUISE KELLY, HOST:
There is a longstanding tradition that presidents don't comment on Federal Reserve policy. Now, President Trump has broken with tradition before. And today on CNBC, he said he is not happy with the Fed's decision to raise interest rates. He suggested it would hurt the economy.
NPR's Jim Zarroli is here with details. Hey, Jim.
JIM ZARROLI, BYLINE: Hi, Mary Louise.
KELLY: So by way of backdrop, the Federal Reserve has raised interest rates seven times over the past three years. What's the president have to say about it?
ZARROLI: Well, he - in the interview, he first had some nice things to say about the Fed chairman, Jerome Powell. He said, I put a good man in there. Then - but then he went on to complain that all of these interest rate hikes that the Fed has approved were hurting his efforts to keep the economy strong.
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PRESIDENT DONALD TRUMP: I'm not thrilled because, you know, we go up. And every time you go up, they want to raise rates again. And I don't really - I am not happy about it.
ZARROLI: He talked about the fact that these rate hikes are causing the value of the dollar to rise, which is true. He said that makes American products more expensive overseas, makes it harder to close the trade deficit. Now, it has to be said that there has been a lot of debate in recent years about whether the Fed should be raising rates as much as it has. A lot of people actually agree with Trump's main point, especially people on the left. They say there is no reason to be raising rates as much as they have because inflation pressures are very low, and wages are stagnant.
KELLY: And why is it so controversial for the president to weigh in and express his views on this?
ZARROLI: Because the Fed is supposed to be independent. It has to be protected from political pressure if it's going to do its job, which is, you know, to help the economy find this middle ground between growth and inflation. And if presidents want, they can really exert a lot of pressure on the Fed. So there's been this tradition at least in the past few decades of presidents not commenting on the Fed. And Trump actually spoke about that in the interview.
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TRUMP: Somebody would say, oh, maybe you shouldn't say that as a president. I couldn't care less what they say because my views haven't changed. I don't like - all of this work that we're putting into the economy, and then I see rates going up.
ZARROLI: Now, Trump also stressed he doesn't intend to interfere with Fed policy. But the fact that he made the remarks at all is very unusual. Trump said he's just saying the same things he said when he was a private citizen. But of course he's not a private citizen.
KELLY: He certainly is not, no.
ZARROLI: What he says carries weight.
KELLY: Yeah. Well, has it carried weight on the markets? Has there been any reaction in the financial markets today?
ZARROLI: Well, right after the interview was released, there was a drop in stock prices. They've been going up for days, but they fell. It wasn't a huge drop. One of the things that happened in - you know, in the intervening moments was that the White House put out a statement, you know, reiterating what Trump said in the interview, which is that he respects the independence of the Fed. And that's important. You know, I think the financial markets are just getting used to the fact that this is a president who does things differently. And they're - they've learned to live with some uncertainty.
KELLY: All righty, thank you, Jim.
ZARROLI: You're welcome.
KELLY: That's NPR's Jim Zarroli.
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