Trump escalates pressure on the Fed to cut rates after the ECB announces new stimulus
- President Donald Trump took aim at the Federal Reserve once again Thursday as Europe launched a sweeping stimulus package.
- The central bank has increasingly been a target of verbal assaults out of the White House ahead of the 2020 elections.
- Policymakers are highly unlikely to cut to the extent Trump wants. The Federal Reserve operates independently of political influence.
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President Donald Trump took aim at the Federal Reserve once again Thursday as Europe launched a sweeping stimulus package, saying that had put Americans at a disadvantage.
"European Central Bank, acting quickly, Cuts Rates 10 Basis Points," the president wrote on Twitter. "They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports.... And the Fed sits, and sits, and sits. They get paid to borrow money, while we are paying interest!"
In an attempt to shield the bloc from a deeper slowdown, the ECB announced Thursday it would cut interest rates to minus 0.5% and restart a stimulus program called quantitative easing that injected money into the economy.
Trump has repeatedly claimed other central banks unfairly weaken their currencies, making American exports relatively expensive. ECB President Mario Draghi has rebuked such accusations in recent months, saying the central bank does not target the exchange rate as it sets policy.
The broadside came less than a week before the Federal Reserve was set to meet. Policymakers are expected to ease further but not to the extent the White House wants. Trump has turned up pressure on the central bank as trade tensions threaten to weigh on the outlook for his reelection bid in 2020.
Trump said on Wednesday that Fed officials should lower interest rates to zero or lower, which would be an unprecedented move that even advisers have hesitated to publicly coalesce behind. The White House also briefly examined options to manipulate the dollar this year as it sought to juice the economy.
"We've been focused on a stable dollar," Treasury Secretary Steven Mnuchin told CNBC in an interview Thursday when asked about the proposal. "I understand the president's concerns. We talk about them all the time."