Trump summons Fed's Jerome Powell, tells him he's making a mistake on rates
Reuters FILE PHOTO: U.S. President Donald Trump looks on as Jerome Powell, his nominee to lead the U.S. Federal Reserve moves to the podium at the White House in Washington, U.S., November 2, 2017. REUTERS/Carlos Barria/File Photo U.S. President Donald Trump called Federal Reserve Chair Jerome Powell to the White House on Thursday for their first face-to-face meeting since he took office in January and told the central bank chief he was making a "mistake" by not lowering interest rates. Both the White House and Fed confirmed the two met at the president's invitation, renewing a fractious relationship in which Trump has repeatedly berated Powell for not cutting rates as the president desires. "Chair Powell did not discuss his expectations for monetary policy," the Fed said in a statement after the meeting, "except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook." He told Trump that he and his colleagues at the Fed "will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective, and non-political analysis," the statement said. White House spokeswoman Karoline Leavitt said she and the president had seen the Fed's statement and that it was correct. However, she added, "the President did say that he believes the Fed chair is making a mistake by not lowering interest rates, which is putting us at an economic disadvantage to China and other countries." The Fed earlier this month left the policy rate in the 4.25%-4.50% range, where it has been since December, and policymakers have since signaled they may leave it there for another few months as they wait for more clarity on tariff policy.
Policymakers are worried the tariffs and policy uncertainty could slow the economy, but even more so are concerned that they could lead to persistently higher inflation, minutes from the Fed's May meeting released on Wednesday show. Financial markets currently are pricing in a Fed interest-rate cut in September, with a second one to follow in December. Trump elevated Powell to the post of Fed Chair during his first term but quickly fell out with him over his interest-rate decisions. He has said he wants to see him gone from the central bank, though he has also said he has no intention of trying to fire Powell. But the possibility of a firing has unsettled financial markets that bank on an independent Fed's ability to do its job without political interference. Those fears were partly alleviated last week after a Supreme Court ruling, in a pair of cases testing Trump's ability to fire the leadership of other independent government agencies, signaled the central bank may be treated as a special case whose chair cannot be terminated at will. Powell last met with Trump in November 2019, during Trump's first term, in a 30-minute meeting also attended by then-Treasury Secretary Steven Mnuchin. It is Powell's first presidential visit in three years - the last one was with Joe Biden and Treasury Secretary Janet Yellen at the White House. Powell has said that such meetings are always at the request of the president and never the other way.
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