Above Photo - Federal Reserve Chair Jerome Powell Holds News Conference After Federal Open Market Committee Meeting WASHINGTON, DC - MAY 01: Federal Reserve Board Chairman Jerome Powell speaks during a news conference on May 1, 2019 in Washington, DC. Powell said the Fed will not raise interest rates this quarter and no rate hikes are likely anytime soon. (Photo by Mark Wilson/Getty Images)
Since assuming the presidency, a lingering quagmire for Donald Trump is understanding running the government is much different than running a closed private business. The latest example is trying to dictate the actions of Fed Reserve Board chair Jerome Powell. Today the Fed rebuffed Trump’s constant badgering to lower the discount rate so that he could claim a political victory by deciding to keep them as-is, until the next meeting.
“we reviewed economic and financial developments in the United States and around the world and decided to leave our policy interest rate unchanged” Jerome Powell, Chair of Federal Reserve
The Federal Reserve is an august group of professionals charged with managing monetary policy through their Federal Open Market Committee (FOMC). Their actions are non-partisan and usually free of any political influence. That is, until Donald Trump came along. The Fed rate is based on the economic environment. As a measure to thwart inflation the rate may increase based on positive economic metrics.
Some want it both ways
From a political standpoint Trump is enthusiastic to tout positive economic news. Unfortunately, those like him dismiss the elementary notion of when and how the Fed rate moves. For months, Trump has suggested to Powell to keep a lid on increasing the rate. Not only is that type of communication unwise, it is unethical given the Fed’s core responsibility. From a practical standpoint the Fed rate only declines based on a sliding economy. If that were to happen it would contradict Trump’s proposition that all and any news from his administration is positive.
Recently two of Trump’s acolytes; Stephen Moore and Herman Cain had been suggested to join the Fed. Their selection was fueled by their contempt of Powell’s fiscal leadership of the Board. Just last week following protesting the criticism he received as being a nominee, Cain’s was abruptly dropped from consideration. Likewise, Moore’s background has come under fire and it appears unlikely he can further survive the nomination process. Interestingly, several weeks ago to Trump’s delight he applauded Moore for criticizing Powell’s leadership by penning a controversial opt-ed supporting a decrease in the Fed rate.
The next Fed monetary meeting is slated for June 18th & 19th.
Read Powell’s remarks HERE