President Trump on Friday said the Federal Reserve should cut interest rates to stimulate the economy, despite an unemployment rate near record lows and strong monthly job gains.
“I personally think the Fed should drop rates,” Trump told reporters at the White House on Friday, predicting that the economy would take off like “a rocket ship” if the independent central bank lowered borrowing costs.
{mosads}Trump has criticized the Fed throughout his presidency for raising interest rates after it cut them to near-zero levels during the Obama administration. The Fed has hiked rates eight times since Trump took office in 2017 and four times since Fed Chairman Jerome Powell took over the bank in 2018.
Trump has blamed the Fed and Powell, whom he appointed in 2017 to chair the central bank, for slowing the U.S. economy by raising interest rates. The U.S. economy grew a strong 2.9 percent in 2018 while unemployment fell to 3.8 percent, close to the lowest level in modern history.
Trump’s comments came hours after the Labor Department released the March employment report showing an increase of 196,000 jobs last month, exceeding expectations.
The president argued once again on Friday that the U.S. could have grown at a faster rate if the Fed didn’t increase borrowing costs in an effort to stave off inflation, which has remained below the central bank’s target range.
“I think they slowed us down. There’s no inflation. I think in terms of quantitative tightening, it should actually now be quantitative easing,” Trump said Friday.
The Fed conducted three rounds of “quantitative easing” to stimulate the economy during the Obama presidency when unemployment was high and growth lagged.
The central bank sought to increase borrowing and investment by flooding the economy with money through the purchase of hundreds of billions of dollars in Treasury and mortgage bonds.
As unemployment fell and growth accelerated toward the end of Obama’s presidency and the start of Trump’s, the Fed began to tighten interest rates and sell the bonds it purchased in an effort to cut back stimulus to the strengthening economy.
Trump as a presidential candidate bashed the Fed and its then-Chairwoman Janet Yellen for stimulating the economy well into 2015 and 2016. He said Yellen was “obviously political” and kept interest rates low to spur the stock market and make Obama look good.
Even though the economy has improved notably since his election, Trump has asked the Fed to maintain stimulative policies to boost stock gains and unemployment during his presidency.
“Despite that we’re doing very well,” Trump said.