Trump got exactly what he wanted from the Fed, but for reasons he is going to hate
- President Donald Trump has for months been pushing the Federal Reserve and chairman Jerome Powell to stop hiking interest rates.
- The Fed gave Trump some good news on that front Wednesday by projecting no interest-rate increases in 2019 and just one in 2020.
- But the reason for the pause, a softening US and global economy, will not make Trump happy.
President Donald Trump has for months blasted Federal Reserve Chairman Jerome Powell's interest-rate hikes, imploring the central bank chief to stop tightening monetary policy.
On Wednesday, Trump finally got what he wanted from Powell and the Fed. As part of the Fed's latest decision on interest rates, projections showed the central bank no longer expects to raise interest rates at all in 2019 and only once in 2020 - which Trump was surely pleased to see.But the president may want to shield his eyes when it comes to the rest of the Fed's statement. The reason for the sudden pause in interest rate hikes was in large part due to a slowing of the US and global economy.
For months Trump has urged the Fed to slow its pace of rate hikes to allow the economy to get stronger, calling the central bank the "biggest threat" to the economy. But now instead of pausing interest rates to give the economy more room to run, the Fed is having to scale back because the economy is slowing down.
In their statement explaining the decision to hold rates, the Federal Open Market Committee - which makes the interest rate decisions - said that while the economy looks resilient, the "growth of economic activity has slowed" in recent months.
According to the Fed's latest economic projections, US GDP is expected to grow by 2.1% in 2019. That is well off of 2018's annual GDP growth rate of 2.9% and lower than the Fed December projection of 2.3%.
The Fed's projections for GDP line up with what most Wall Street economists and the Congressional Budget Office expect, all of those groups are much less optimistic than the projections from the White House. In fact, the president's budget, released last week, estimated 3.2% GDP growth for 2019.
This could also cause Trump some political issues going into his reelection campaign. The strong economy has long been one of the president's best political arguments. A recent CNN poll found that while only 42% of people approve of the job that Trump is doing, 71% think that the economy is in good shape - the highest level since February 2001.
And a majority of people gave Trump credit for the strength of the economy, 51% of people said they approved of the president's handling of the economy.
If the economy starts to fade, or slows off of its strong pace, one of Trump's best arguments heading into 2020 may be tarnished.
So Trump may have gotten the pause to interest-rate hikes that he wanted, but the president is not going to be happy with the reasons for why the Fed has slowed down.