Washington: US President Donald Trump on Monday urged the Federal Reserve to go beyond making a “small rate cut” this week, raising pressure on the central bank to lower borrowing costs by more than Wall Street expects.
In a series of tweets ahead of the Fed’s meeting scheduled for Tuesday and Wednesday, Trump reiterated his criticism of independent US monetary policymakers, accusing them of acting too cautiously in comparison to China and Europe.
The Republican president, who is seeking re-election in 2020 and had tied his efforts in part to the strength of the US economy, is seeking a financial jolt from a cut in short-term borrowing rates to counter a global economic slowdown.
Policymakers are widely expected to cut rates by a quarter percentage point on Wednesday, although some investors see chances of a half percentage point reduction.
“The EU and China will further lower interest rates and pump money into their systems, making it much easier for their manufacturers to sell product. In the meantime, and with very low inflation, our Fed does nothing — and probably will do very little by comparison. Too bad!” he wrote on Twitter.
“The Fed has made all of the wrong moves. A small rate cut is not enough, but we will win anyway!” he added.
Fed policymakers have said repeatedly they will not take orders from the president. While they have been sending strong signals about an impending rate cut for weeks, they have made clear they think the nation’s labour market still looks pretty solid.
A cooling in US factory activity might be a sign the American economy is feeling the chill from an economic slowdown across Europe, Asia and Latin America. At the same time, America’s unemployment rate remains near a 50-year low.
Given the conflicting signals, policymakers have left open the question of whether Wednesday’s expected rate cut will inaugurate a series of quarter-percentage-point interest rate cuts that could stretch deep into next year, or something more limited.