President Trump criticized the Federal Reserve for a second time in as many days Friday, second-guessing the central bank for raising interest rates and hurting U.S. companies.
In a pair of morning tweets, Trump said that the Fed’s monetary policy was “taking away our big competitive edge,” and asked “really?”
China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge. As usual, not a level playing field…
— Donald J. Trump (@realDonaldTrump) July 20, 2018
In directly criticizing the Fed Friday and Thursday, Trump is breaking with previous administrations’ practice of not commenting on monetary policy in order to respect the independence of the central bank.
Trump cast the Fed as an obstacle to his goal of lowering trade deficits. He noted Friday that the dollar has risen — it’s up about 8 percent against a broad range of currencies since February. A strengthening dollar makes U.S. goods more expensive to foreign buyers, and thus tends to cut into exports.
The Fed has twice raised interest rates by a quarter percentage point this year, and is expected to implemented two more rate hikes before the end of the year. The Fed’s chairman, Jerome Powell, has said that slowly raising rates is the right way to support the economic recovery without letting inflation rise out of control.
By lessening the supply of dollars, though, tighter monetary policy means a stronger dollar, which is a burden to U.S. exports.
Past tax-cutting presidents pursuing tax cuts have also come into conflict with the Fed. White House officials, though, said that after Thursday’s comments from Trump that he is not intending to interfere with the Fed and that he considers Powell, whom he appointed, a good man.
