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The stories that matter on money and politics in the race for the White House
Donald Trump has said the Federal Reserve’s decision to cut its benchmark interest rate by half a percentage point on Wednesday showed the US economy was either “very bad” or the central bank was “playing politics.”
“I guess it shows the economy is very bad to cut it by that much, assuming that they are not just playing politics,” the Republican candidate for the White House told reporters at a stop at a Manhattan bitcoin bar on Wednesday. “The economy would be very bad, or they are playing politics, one or the other. But it was a big cut.”
With less than two months to go until November’s presidential election, Trump’s latest intervention was not the first time he has been critical of Federal chair Jay Powell or accused the independent central bank of acting politically.
In an interview with Bloomberg News over the summer, Trump warned Powell not to cut interest rates before the election, but said that if he were elected to another four years in the White House, he would let Powell serve out the remainder of his term as chair if he was “doing the right thing”.
In a separate interview with Fox Business Network in February, Trump indicated he wanted to replace Powell and accused him of being “political”, predicting he would cut interest rates to “help the Democrats”.
Powell, who is generally respected on Wall Street for his leadership of the Fed, is a registered Republican who worked in the US Treasury under then- president George HW Bush before moving into investment banking and later working as a partner at the Carlyle Group.
Despite nominating Powell to serve as Fed chair in 2017, Trump repeatedly attacked him during his time in the White House for not lowering interest rates in the midst of trade wars that the then-president had started. In one instance, Trump questioned whether the Fed chair was a bigger enemy to the US than Chinese President Xi Jinping.
Powell’s current term as chair — he was reappointed by President, Joe Biden in 2021 — is set to end in 2026. Powell has said as recently as this summer that he intends to serve out the remainder of his term.
Trump’s comments came hours before he was set to take the stage for a campaign rally in the New York City suburbs on Long Island.
His Democratic opponent, vice-president Kamala Harris, also weighed in on the Fed’s decision, saying the cut would be “welcome news for Americans who have borne the brunt of high prices”.
She added that as a candidate for president her focus remained “on the work ahead to bring prices down”.
Opinion polls suggest that the majority of voters remain deeply concerned about inflation and the cost of living, even as the inflation rate has slowed in recent months. The latest FT-Michigan Ross poll found four in five voters cited price increases as among their biggest sources of financial stress.