President Donald Trump renewed his attack on the Federal Reserve, complaining it doesn’t “listen” to him and contrasting that lack of obedience with the control that China’s leader wields over its central bank.
“The head of the Fed in China is President Xi,” Trump told CNBC television in a telephone interview Monday. “He can do whatever he wants. They devalue. They loosen” monetary policy to help offset the burden of tariffs, he said. The People’s Bank of China lacks the political independence of counterparts like the Fed, meaning Chinese President Xi Jinping and his colleagues must approve major decisions.
Trump’s broadside comes a week before the Fed meets in Washington, when it’s expected to discuss whether an interest-rate cut is needed to help offset an economic slowdown caused by his trade war. His latest assault on the U.S. central bank returned to his argument that it should aid his trade war with China, a sensitive topic among U.S. allies who worry about monetary policy being used for foreign policy goals.
“They devalue their currency. They have for years. It’s put them at a tremendous advantage,” Trump said of the Chinese. “We don’t have that advantage because we have a Fed that doesn’t lower interest rates.”
Refreshing other familiar themes of frustration, Trump said the Fed “certainly didn’t listen to me because they made a big mistake. They raised interest rates far too fast,” and he went on to chide them for hiking “the day before a bond issue goes out so we have to pay more money.”
Trump has been stymied in recent months in his attempts to install political loyalists on the Fed board following his picks of Chairman Jerome Powell and Vice Chairman Richard Clarida, who both earned bipartisan support in the Senate. Trump has soured so much on Powell that he even discussed firing him, according to a Bloomberg report in December.
While the U.S. central bank lifted rates four times in 2018 in response to a strong economy and the lowest unemployment since the 1960s, it has held them steady since December. Last week Powell opened the door to a cut if trade tensions cause U.S. businesses to cut back on investment and hiring. Part of that anxiety was sparked by Trump’s threat to impose tariffs on Mexico unless it stemmed the flow of migrants to the U.S., which he rescinded on Friday evening.
Bloomberg writer Reade Pickert contributed to this report.