Trump calls on Fed to slash rates and weaken dollar despite currency truce with China

President Trump on Tuesday called on the Federal Reserve to slash interest rates to give the U.S. a boost in global trade despite agreeing to a truce with China on currency and exchange rates in a preliminary trade agreement set to take effect in March. 

In a Tuesday tweet, Trump repeated his longstanding demand for the Fed to cut borrowing costs to juice the economy and weaken the value of the U.S. dollar. A weaker dollar would make U.S. goods relatively less expensive in foreign markets, where American products are often more expensive than goods from countries with lower interest rates.

“The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard,” Trump tweeted.

The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard. We would then focus on paying off & refinancing debt! There is almost no inflation-this is the time (2 years late)!

— Donald J. Trump (@realDonaldTrump) January 28, 2020

Trump’s tweet comes as the Fed’s rate-setting Federal Open Markets Committee begins its first policy meeting of 2020. The Fed is almost certain to announce Wednesday it will keep interest rates steady as the U.S. economy remains strong.

Trump has spent most of his presidency seeking to bend the independent central bank to his whims and enlist it in his trade war with China. The president has long accused the Fed and its chairman, Jerome Powell, of choking U.S. prosperity by refusing to pump crisis-level stimulus into a growing economy with unemployment at 50-year lows. 

While Trump’s Tuesday tweet is the latest in a long line of Fed missives, it is the first since the president signed a “Phase One” trade deal with China on Jan. 15 that included a promise not to target foreign exchange rates for competitive purposes.

The text of the agreement, which takes effect 60 days after its Jan. 15 signing, says the U.S. “shall refrain from competitive devaluations and not target exchange rates for competitive purposes, including through large-scale, persistent, one-sided intervention in exchange markets.”