On Tuesday US President Donald Trump re-attacked the Federal Reserve and blamed Chairman Jerome Powell for hindering the country’s economic growth. He accused him of being happy about the rising interest rates. He even suggested regretting his decision of appointing Powell to the position. Trump said that the biggest risk to the US economy was the high rates of interest rather than growing trade wars, tariffs or clash with Saudi Arabia regarding journalist Jamal Khashoggi’s death. He made comparisons with Obama’s administration saying that the former president had functioned with no interests from the Fed that secured low rates for almost 10 years allowing the economy to recover and grow following the recession of 2008. The current President said that it is quite impossible to compete with such strategies. The Fed has raised the rates of interest by 1-quarter point thrice in 2018 and has plans for 4 more in December as monetary policymakers look for the tempering of credit demand.
As the economic situation worsens, Powell has taken notes of the insecure position of the Federal Reserve which is tasked with handling two big risks- one being very fast movements leading to unnecessary shortening of the expansion and the other being way too slow movements which are at the risk of destabilizing overheating.
These recent attacks on the Fed by Trump mark their ongoing feud. Last week he harshly criticized the Fed chairman Jerome ‘Jay’ Powell saying that his actions were making him uncomfortable and were uncalled for as they were moving at a very fast pace. It is rather uncommon for a sitting president to pass comments on the Fed which are supposed to remain free of all political influences and pressures. Trump further said that he has no plan or intention of firing Powell with no historical example of any such incident. The 10th section of the Federal Reserve Act, however, states that each of its members will hold office for 14-years-term unless he is removed by the President.