In a direct statement, former U.S. President Donald Trump criticized the Federal Reserve’s recent decision to lower interest rates, calling it a “political move.”
The decision was made as the Fed continues to tread a tightrope between reining in inflation and keeping the economy steady.
During a Thursday rally in South Carolina, Trump voiced frustration, claiming that political agenda is usurping the independent institution of the economic data inside actions of the central bank. “The Fed is supposed to be independent, but this reduction feels more like an attempt to hurt the economy during a crucial election period,” Trump said. He adds that this is an attempt to reverse the good economic momentum during his tenure, and he still keeps dropping hints about the presidential candidacy in 2024.
Fed on the situation of the country’s economy
The Federal Reserve has cut the benchmark interest rate by 25 basis points citing concerns over slower-than-expected economic growth and unprecedented uncertainties in markets across the globe.
While Powell said explicitly that the action was one of controlling inflation and achieving stable employment, in comments from the president, he seemed to feel this rate cut was done to weaken the economy, allowing his political opponents an opportunity to prevail.
A History with the Fed
Trump has also been a critic of the Federal Reserve for a long time, especially during his presidency when he was seemingly publicizing his appeals to the institution to reduce interest rates. His administration lobbied the Fed every other day to cut borrowing costs to boost the economy. However, the central bank has always insisted on its independence relies on its economic judgments, and does not give in to political demands.
“The Fed’s job is to stabilize the economy, and they have all this tool, adjustment through rates,” said Dr. Susan Price, a financial analyst at Georgetown University. “But it’s not surprising that politicians would be suspicious over some of the coincidences that surround any timing of those moves.”
Looking Ahead
As the U.S. begins another cycle of elections, one can expect that any actions of the Federal Reserve will be a hot-button issue; this time, the pot will have been stirred by Trump using them as rallying cries for his base. We shall have to see just how significantly the decisions made by the Fed will feel their way into either the economic or political arena, but one thing stands firmly in the balance: Trump’s insults are spilled fuel to the contentious debate.
