Former President Donald Trump said that if he is reelected, he would not reappoint Federal Reserve Chair Jerome Powell, accusing Powell of considering rate cuts to give Democrats an advantage in the 2024 elections.
“It looks to me like he’s trying to lower interest rates for the sake of maybe getting people elected, I don’t know,” Trump said in an interview with Fox News Business’ Maria Bartiromo that aired Friday morning.
“I think he’s going to do something to probably help the Democrats, I think, if he lowers interest rates,” Trump said when asked if he believes the country will avoid a recession.
The former president said he has “a couple of choices” for the next Fed chair but declined to name them.
Powell reiterated Wednesday the Fed is considering rate cuts to bring rates down from multi-decade highs designed to combat high inflation. But he all but ruled out rate cuts in March, suggesting they may begin later this year. That decision to delay rate cuts was pretty much made for him Friday when the Bureau of Labor Statistics reported the US economy added a stunning 353,000 jobs in January.
Trump accused Powell of being “political,” adding to years of verbal attacks since Trump nominated him for Fed chair in 2017. Powell was reappointed by President Joe Biden in 2021. The Fed chair cannot be fired, but the president is responsible for nominating a candidate every four years for Congress’ approval.
Trump sparred with Powell almost immediately after he was appointed to the Fed, accusing Powell of hiking interest rates to harm the economy. The Fed, by its charter an apolitical, independent body, largely ignored Trump’s extraordinary attacks. Powell during the Trump presidency avoided constant questions at news conferences about Trump’s latest tweet, but Powell continued to insist the Fed was focused exclusively on its dual mandate to improve job growth and keep inflation lower.
When Powell and the Fed sent rates to near zero in an extraordinary, emergency rate cut in the early days of the pandemic, Trump offered Powell rare praise.
Rate hikes are intended to slow the economy by increasing the amount companies pay to borrow money. That can result in higher rates on government debt, to which consumer loans like mortgages and credit card rates are pinned. When borrowing gets more expensive, companies can hire less and consumers can spend less, which can control inflation from running away.
They’re a necessary part of the economic cycle, and politicians often grumble when rates are high. But Trump’s constant attacks on the Fed during his presidency were unprecedented both for their frequency and directness, and Trump’s tweets about the Fed would often move markets, according to a 2019 Duke University and London Business School study.
Trump, in his interview, took credit for the rallying stock market, saying it’s doing well “because they think I’m going to be elected.” Stocks rallied throughout 2023, bouncing back from a miserable 2022. But stocks also grew strong in 2021, Biden’s first year as president.
Powell, when asked at a news conference Wednesday about whether he wanted a third term, said he’s not focused on his job status.
“I don’t have a stance on that. That is not something I am focused on,” Powell said. “I am focused on doing our jobs. This year will be a highly consequential year for the Fed and monetary policy, and all of us are very buckled down and focused on doing our jobs.”
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