National Economic Council Director Larry Kudlow defended the Federal Reserve Thursday from President Donald Trump’s criticism that the central bank is raising rates too quickly.
“I think [Fed Chairman] Jay Powell’s on target,” Kudlow said in an interview Thursday morning on CNBC.
“There’s no reason economic growth has to cause inflation,” he continued.
Kudlow noted that the Fed already raised rates seven times during the current extended stock market rally that the U.S. has enjoyed over the last two years. The Fed has raised the baseline interest rate it sets for banks to borrow from it gradually, after years of historically low interest rates. The Federal Reserve raises interest rates to help curb inflation, the measure of prices.
President Trump appointed Powell, but the Fed chair is granted independence to allow the central bank to make its decisions based on the health of the economy rather than political considerations.
“There’s nothing new here, as far as I can tell. We all know the Fed is independent,” said Kudlow, downplaying the president’s persistent criticism of the Fed’s recent decision-making on interest rates. “The president is not dictating policy to the Fed, he didn’t say anything remotely like that.”
Trump called into “Fox and Friends” earlier Thursday morning in part to criticize the Fed for raising rates, saying that he now pays higher interest on his own debt as a result.
On Wednesday, Trump said that the Fed “has gone crazy.”
“I believe there’s agreement here that strong economic growth does not cause inflationary and does not cause panic increase in interest rates,” added Kudlow.
