WASHINGTON — President Trump urged The Federal Reserve Wednesday to cut interest rates to zero or even usher in negative rates, suggesting a last-ditch monetary policy tactic tested abroad but never in America.
His comments came just one day before European policymakers are widely expected to cut a key rate further into negative territory.
In a series of tweets, Trump said: “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt,” adding that “the USA should always be paying the the lowest rate.”
Trump continued to criticize his handpicked Fed chair, Jerome Powell, saying “it is only the naivete of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing.”
He concluded by calling Powell, whom he nominated to head the central bank in 2017, and his Fed colleagues “Boneheads.”
Trump’s request is extraordinary for several reasons. The U.S. economy is still growing solidly, and consumer spending is strong, making this an unusual time to push for monetary accommodation, particularly negative rates, a policy that the Fed debated but passed up even in the depths of the recession. It is also typical for countries with comparatively strong economies to pay higher interest rates, not the “lowest” ones.
But Trump is facing an economic slowdown as the effects of his trade war with China and slowing global growth begin to rattle consumer confidence and threaten business investment, particularly in the manufacturing sector. With the 2020 election looming, Trump has begun looking for ways to keep the economic expansion going strong. Along with calling on the Fed to lower rates, he’s also mulled additional tax cuts.
The president’s call for…