President Donald Trump delivered a meandering answer when giving his reaction to Federal Reserve Chairman Jerome Powell's most recent remarks about cutting interest rates - which Trump has long considered a priority.
Trump took questions in the Oval Office Friday afternoon and was asked about Powell's comments earlier in the day at the Federal Reserve's annual symposium at Jackson Hole, Wyoming. There, Powell hinted at a possible upcoming rate cut, but stopped short of guaranteeing one. Trump has long called for the Fed to cut interest rates, but the board has resisted because of inflation fears.
When Trump talked about the development, he referred to the chairman, whom he nominated to lead the central bank in 2017 but has turned on in recent months, by his common epithet, "Too Late."
"We call him 'Too Late' for a reason," Trump said. "He should have cut him a year ago. He's too late."
Trump said that the stock market had shot up 1,000 points before he entered the Oval Office to speak about next year's World Cup. The Dow Jones finished the day up about 850 points on news of the potential cut.
"We have a country that the market, it's the hottest it's ever been," he said. Trump then proceeded on a tangent where he spoke about rebuilding the U.S. military, before going on to blame his predecessor Joe Biden for the exit from Afghanistan.
“We had a great, successful first term, but this is going to be even better,” he said. “But we rebuilt it. We gave a lot of it away to Afghanistan, but relatively small compared to the overall.”
The president then went on to blame Biden for the Russian invasion of Ukraine, specifically for Biden’s remarks in January 2022 where he spoke Russian President Vladimir Putin committing a “minor incursion” into Ukraine, which Biden later had to clarify would be considered an invasion.
Powell has largely taken a wait-and-see approach to reducing interest rates, largely in response to Trump’s “Liberation Day” tariffs, which Trump repeatedly paused before they went into effect earlier this month.
“This year, the economy has faced new challenges, significantly higher tariffs across our trading partners are remaking the global trading system,” he said. “Tighter immigration policy has led to an abrupt slowdown in labor force growth over the longer run. Changes in tax spending and regulatory policies may also have important implications for economic growth and productivity.”
Powell did not mince words when talking about the economic effects of the tariffs.
“Turning to inflation, higher tariffs have begun to push up prices in some categories of goods,” he said. In July, the Consumer Price Index rose 0.2 percent in the past month, and rose 2.7 percent in the past 12 months. But the core CPI, which includes all items save for food and energy, rose 3.1 percent in the past year and 0.3 percent in the past month.
“The effects of tariffs on consumer prices are now clearly visible we expect once with high uncertainty about both timing and amounts, the question that matters for monetary policy is whether these price increases are likely to materially raise the risk of an ongoing inflation problem,” Powell said.
Still, Powell creaked the door open ever so slightly to an interest rate reduction this year.
“The stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance,” he said. “Nonetheless, with policy and restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance.”
At the same time, Powell went to great lengths to say that politics would not influence the Federal Open Market Committee’s decision either way.
“Monetary policy is not on a preset course [committee] members will make these decisions based solely on their assessment of the data and its implications for the economic outlook and the balance of risks,” he said.
In recent months, Trump has ramped up his criticism of Powell and the Federal Reserve for its refusal to lower interest rates. His administration has criticized the renovation of the Federal Reserve’s office building in Washington, D.C, for going over budget.
Trump himself visited the office building, a major breach of normal decorum given how the Federal Reserve attempts to remain apolitical, to discuss the renovation. During that meeting last month, Powell corrected Trump by saying his assessment included the cost of an unrelated project.
Earlier this week, Trump called on Lisa Cook, a member of the Federal Reserve’s Board of Governors, to resign and accused her of committing mortgage fraud.
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