Trump Escalates Attack on Fed Chief 08/24 09:03
President Donald Trump launched a furious and highly personal Twitter attack
Friday against the Federal Reserve and Chairman Jerome Powell, fuming that the
Fed once more "did NOTHING!" and wondering who is "our bigger enemy" -- Powell
or China's leader.
WASHINGTON (AP) -- President Donald Trump launched a furious and highly
personal Twitter attack Friday against the Federal Reserve and Chairman Jerome
Powell, fuming that the Fed once more "did NOTHING!" and wondering who is "our
bigger enemy" --- Powell or China's leader.
The outburst came after Powell, speaking to central bankers in Jackson Hole,
Wyoming, gave vague assurances that the Fed "will act as appropriate" to
sustain the nation's economic expansion. While the phrasing was widely seen as
meaning interest rate cuts, he offered no hint of whether or how many
reductions might be coming the rest of the year.
Powell had barely finished speaking before Trump escalated his criticism of
the Fed, which he has repeatedly accused of keeping rates too high. For months,
the president has ridiculed Powell, the man he picked to lead the Fed.
"As usual, the Fed did NOTHING!" Trump tweeted, adding, "We have a very
strong dollar and a very weak Fed." He went further by saying: "My only
question is, who is our bigger enemy, Jay Powel (sic) or Chairman Xi?" --- a
reference to China's President Xi Jinping. Trump later corrected the name
Asked by reporters late Friday if he wanted Powell to resign, Trump
responded, "Let me put it this way: If he did I wouldn't stop him."
Powell has said he has no intention of resigning before his four-year term
While the "enemy" remark appeared to elevate Trump's attacks on the Fed to a
new level, Fed officials meeting in Jackson Hole sought to play down the
Fed Vice Chairman Richard Clarida said he had been too busy attending the
conference to even look at Trump's tweets. He said the Fed planned to keep
doing its job of pursuing low unemployment and stable prices in spite of
"This is an institution created by the Congress more than 100 years ago,"
Clarida said in a CNBC interview. "We have a very clear assignment from the
Congress. ... We are just focusing on doing our job."
Many private economists have expressed growing alarm about Trump's criticism
of the Fed as an intrusion on its independence and a threat to its credibility.
David Jones, a leading historian of the Federal Reserve, said the "enemy"
remark set an unfortunate precedent.
"This challenges something that has been sacred in the history of the
world's most successful central bank," said Jones, an economist and author of
four books on the Fed. "The central banks that have been successful are those
which are independent of political pressures and were free to make the
appropriate monetary policy."
Powell's speech came on a day of fast-moving events in the financial world
and a sharp escalation in the trade dispute with China that threatens to tip a
weakening global economy into recession.
China announced a new round of tariffs on U.S. products earlier in the day,
and Trump responded with higher duties on certain Chinese goods.
He also declared on Twitter that he had "hereby ordered" American companies
with operations in China "to immediately start looking for" other places in
which to do business.
"Our Country has lost, stupidly, Trillions of Dollars with China over many
years," he said. "They have stolen our Intellectual Property at a rate of
Hundreds of Billions of Dollars a year, & they want to continue. I won't let
Markets in the U.S., Asia and Europe tumbled, with the Dow Jones Industrial
Average dropping 623 points.
In his speech in Jackson Hole, Powell said Trump's trade wars have
complicated the Fed's ability to set interest rates and have contributed to a
global economic slowdown.
Last month, the Fed cut rates for the first time in a decade, and financial
markets appear to be expecting more such steps this year. Trump has argued for
a full percentage-point reduction in the coming months --- a step most
economists consider excessive.
The president contends that lower rates in other countries have caused the
dollar to rise in value and thereby hurt U.S. export sales. Earlier in the
week, he told reporters, "If the Fed would do its job, you would see a burst of
growth like you have never seen before."
Powell has said that the White House criticism has had no effect on the
Fed's deliberations over interest rate policy.
Trump has insisted in the past that he could fire Powell if he wanted to, an
assertion that most experts regard as dubious at best. No Fed chairman has ever
been fired by a president, although in 1979, then-President Jimmy Carter wanted
to make a change at the Fed --- so he offered Fed Chairman G. William Miller
the job of Treasury secretary so he could nominate Paul Volcker as his new Fed
The law creating the Fed says its officials and those of other independent
agencies can be "removed for cause" by a president. While that issue has never
arisen in regard to a Fed official, the courts ruled decades ago that "for
cause" means more than a policy disagreement with a president.