Fed chairman: Negative rates 'not appropriate' for US economy

“Our economy is in a strong position. We have growth, we have a strong consumer sector, we have inflation that’s a bit below target,” Powell told the bicameral panel. “The very, very low, and even negative rates that we see around the world would not be appropriate for our economy.”

The Fed chair noted that it’s typical to see negative rates in larger economies when growth and inflation are low, but said that’s not the case for the U.S.

Powell’s comments put him at odds with Trump, who has called for the Fed to consider negative interest rates, one of many complaints the president has with the central bank and Powell. Five central banks — Japan, Sweden, Denmark, Switzerland, and the European Central Bank — have dropped rates into negative territory.

“We are actively competing with nations who openly cut interest rates so that now many are actually getting paid when they pay off their loan, known as negative interest,” Trump said during remarks Tuesday at the Economic Club of New York. “Whoever heard of such a thing? Give me some of that. Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it.”

The president said the Fed’s unwillingness to shift to negative rates puts the U.S. at a competitive disadvantage to other countries.

The central bank has cut interest rates three times this year, though Powell suggested to lawmakers Wednesday it is comfortable with current interest rates.

Unlike his predecessors, who have refrained from criticizing the Fed, Trump often uses the central bank as a punching bag and accused the bank of holding back economic growth by raising rates last year.

He has called the Fed and Powell “boneheads” and said before its last meeting this month that the central bank would be “derelict in its duties” if it didn’t lower rates.