President Trump Criticizes Fed's Decision to Hold Rates
Following the Federal Reserve's decision to maintain interest rates on Wednesday, President Donald Trump expressed his discontent, alleging that the central bank had failed to address inflation.
Trump asserted that Fed Chair Jerome Powell and the Fed "failed to stop the problem they created" regarding inflation. He also accused the Fed of poor bank regulation and excessive focus on "DEI, gender ideology, 'green' energy, and fake climate change."
The President outlined his plans to combat inflation, including boosting energy production, reducing regulations, rebalancing international trade, and reviving domestic manufacturing. "I will do much more than stopping Inflation, I will make our Country financially, and otherwise, powerful again!" Trump declared.
Trump's remarks marked an escalation in tensions between the President and the Fed over monetary policy direction. He had previously stated that he would "demand" lower rates and expected to speak directly with Powell.
However, Powell stated that he had not yet spoken with Trump and refrained from commenting on the President's remarks. Nevertheless, Powell acknowledged that the Trump administration's economic policies could potentially impact Fed policy in the future, warranting caution in further actions.
Powell highlighted uncertainties in trade, immigration, fiscal, and regulatory policies, noting the need to assess their potential effects on the economy and inflation. He emphasized that the Fed would remain vigilant and consider data before adjusting its stance.
Despite Trump's criticism, some positive signs have emerged regarding inflation. The Consumer Price Index showed slight improvement in December, while economists project a modest increase in the Fed's preferred inflation gauge, the Personal Consumption Expenditures index, for the same period.
While Powell declined to address Trump's comments directly, he reaffirmed the Fed's independence and commitment to achieving its goals using its tools. Trump, however, alleged that the Fed had been distracted by non-core issues, prompting him to assign the Treasury Department with the task of reducing regulations and stimulating lending.