Trump Complains About Rising Interest Rates, Calling the Fed ‘My Biggest Threat’

The president says he is not happy with Fed Chairman Jerome Powell

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Kate Davidson

Updated Oct. 17, 2018 6:09 a.m. ET

President Trump reiterated his complaints that the Federal Reserve is raising short-term interest rates too fast, calling the U.S. central bank “my biggest threat.”

“It’s independent so I don’t speak to him, but I’m not happy with what he’s doing, because it’s going too fast,” Mr. Trump said in an interview with the Fox Business Network, referring to Fed Chairman Jerome Powell, whom he nominated last year.

“You looked at the last inflation numbers, they’re very low,” he said while arguing for a slower increase in interest rates.

The president acknowledged Mr. Powell was his pick to replace former Fed Chairwoman Janet Yellen, and said he wasn’t blaming anyone.

“I put him there, and maybe it’s right, maybe it’s wrong,” he said, adding, “I put a couple of other people there that I’m not so happy with too. For the most part, I’m very happy with people.”

In the interview, Mr. Trump said Mr. Powell is “being extremely conservative, let me use a nice term.” But he demurred when asked directly if Mr. Powell would be out of a job if his decisions prove misguided. “Well number one, I don’t appoint for another four years, five years,” the president said, “so look, I am not happy with what he’s doing.”

The law is vague about whether a president can fire a Fed chairman, who serves a four-year term.

Mr. Trump has nominated three of the four current members of the Fed’s board of governors: Mr. Powell, Vice Chairman Richard Clarida and Vice Chairman for Supervision Randal Quarles. Three other Trump nominations to the board are still awaiting Senate confirmation.

The president’s comments are his latest criticism leveled at the central bank. On Oct. 9, he repeated his displeasure with the Fed and said he believed inflation remained in check. “I think the Fed has gone crazy,” he told reporters the next day, in the middle of a stock market selloff.

Mr. Powell said earlier this month he sees little sign the economy is overheating, but defended the Fed against Mr. Trump’s criticism that policy makers are raising rates too fast.

Consumer prices, a broad measure of inflation, rose less than expected for the second straight month in September, the Commerce Department said last week, suggesting price pressures remain in check. In the 12 months through September, overall prices rose 2.3%, the smallest year-over-year change since February.

The Fed’s preferred inflation gauge, the personal-consumption expenditures index, rose 2.2% in August from a year earlier, above the Fed’s 2% target.

Trump’s repeated critiques represent a break from previous White House protocols, dating back to the early 1990s, not to comment on monetary policy or otherwise criticize the central bank.

Former Fed Chairwoman Janet Yellen said Monday the president’s attacks on the Fed are “counterproductive.”

“There’s no law against that,” she said. “But I don’t think it’s wise.”