Fearing that the economy is on the verge of a recession, President Donald Trump on Wednesday descended into a Twitter rant, slamming the Federal Reserve chairman Jerome Powell and other leaders of the U.S. central bank as “Boneheads” while demanding they slash U.S. interest rates “down to ZERO, or less.”
“The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt,” Trump tweeted. “INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term. We have the great currency, power, and balance sheet.”
Trump’s message marked the first time a U.S. president has publicly suggested negative interest rates. Such a move would likely exhaust much of the Federal Reserve’s firepower to fight a future recession at a time when the U.S. economy is still growing.
Trump continued his rant in another post, writing online: “The USA should always be paying the the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of ‘Boneheads.’”
Trump has leveled increasingly harsh broadsides against his handpicked Federal Reserve chief in recent weeks, as Powell has declined to explicitly commit to the campaign of aggressive rate cuts the president has sought.
After Powell pledged last month that the Federal Reserve would “act as appropriate” to support the record-long U.S. economic expansion, but did not hint at an imminent reduction in rates, Trump savaged the chairman on Twitter — pondering whether Powell or China’s communist leader Xi Jinping was America’s “bigger enemy.”
Trump, who has maintained he has “the right to fire” Powell, expressed regret last week over his decision in November 2017 to nominate him as chairman, tweeting: “Where did I find this guy Jerome? Oh well, you can’t win them all!” Powell said in July he would not leave his post if the president attempted to oust him.
Trump has also complained about U.S. interest rates in relation to those of other countries, claiming that fellow heads of government at last month’s G-7 summit in Biarritz, France, were indeed “giddy” about their interest costs, and charging that the Federal Reserve “cannot ‘mentally’ keep up with the competition” abroad.
Trump’s intense criticisms of the Fed chairman come as the U.S. economy stares down financial warning signs indicating a possible recession, but Powell said last week the central bank is “not forecasting or expecting” such a crisis.
David Kotok, chief investment officer at Cumberland Advisors, warned that “Trumpanomics of Fed bashing and trade war are an economic menace to the United States.”