Trump wants say on interest rates

WASHINGTON — Republican presidential candidate Donald Trump said Thursday at a news conference in Florida that the president should have a say in interest rates and monetary policy, a move that would run counter to the longstanding practice of keeping the U.S. Federal Reserve independent of political actors.

“I think, in my case, I've made a lot of money. I've been very successful,” Trump said at his Mar-a-Lago club in Palm Beach. “And I think I have better instincts than, in many cases, the people who are at the Federal Reserve or the president.”

Donald Trump has often expressed frustration with the executive branch's lack of power over interest rates. On Thursday, he criticized Federal Reserve Chairman Jerome Powell for acting “a little too early and a little too late” in changing interest rates.

Trump elevated Powell to his top job, a position he has since been reappointed by President Joe Biden. But Powell angered Trump by keeping interest rates higher than he would have liked. Trump responded by calling the Fed chairman and his colleagues “morons” and at another point asking in a social media post who was the bigger “enemy,” Powell or Xi Jinping, the Chinese president.

Trump acknowledged Thursday that there had been bad blood toward him, saying he had a “habit of taking it out on him.”

Although Trump flirted with the idea of ​​firing Powell during his tenure in the Oval Office, it is unclear whether it is legal to fire or demote a sitting Fed chair.

Powell has pledged not to let political pressure influence the Fed's decisions. Since the late 1970s, presidents have traditionally resisted the temptation to publicly criticize the U.S. central bank over interest rates.

Powell and his colleagues have kept their benchmark interest rate at a record low in more than 20 years since July 2023, in an effort to contain inflation. But as the labor market has weakened, and especially after the unemployment rate climbed to 4.3% in July, some economists have criticized officials for waiting too long to cut rates.

The Fed may yet get the soft landing it’s hoping for: Weekly jobless claims fell more than expected in new data released Thursday, a small but positive development. Stocks rebounded on the report, with the S&P 500 up 2.3% by the end of the day.

Given the possibility that everything will go well, central bank officials are not ready to panic just yet. At an event Monday, Mary C. Daly, the president of the Federal Reserve Bank of San Francisco, suggested that officials are keeping a close eye on the jobs market to try to determine whether it is slowing too much or simply returning to normal after a few roller-coaster years.

“We’re at the point where we’re asking, is the labor market slowing down a lot or a little bit?” Daly said, pointing to one-time factors that could have clouded the latest report, such as Hurricane Beryl and a recent influx of new immigrant workers that have pushed more people looking for jobs.

“Clearly inflation is moving toward our target, clearly the labor market is slowing, and we're at a point where we have to balance those targets,” she said.

Fed officials are now expected to cut interest rates at their next meeting in mid-September, after early voting begins in some states. Trump has said he does not think the Fed should cut interest rates so close to the election. However, he has often said in campaign speeches that he wants lower rates if he wins a second term.

Trump has wavered on what role he thinks the executive branch should play in managing interest rates. In an interview with Bloomberg Businessweek earlier this summer, Trump said he would focus on cutting costs so the Fed could then lower interest rates.

At a rally last week in Pennsylvania, Trump linked lowering borrowing costs to other policies that are more within the president's purview.

“We're going to cut regulation, we're going to cut energy prices, we're going to cut interest rates, and we're going to bring prices down, and we're going to bring them down very quickly,” Trump said at a campaign event on July 31.

Information for this article was provided by Josh Wingrove, Nancy Cook, Mara Paula Mijares Torres and Hadriana Lowenkron of Bloomberg News (TNS) and Jeanna Smialek of The New York Times.