President Donald Trump’s attacks on the Federal Reserve and its chairman, Jerome Powell, are an abuse of power and represent a “big mistake” for the administration, according to 2020 presidential frontrunner Joe Biden.
“I’m not going to get into the personalities, but I do say this: the president should not be trying to pressure the Fed,” Biden said in an interview with CNBC’s John Harwood. “That’s supposed to be an independent entity out here. It’s just like how he pressures the military and intervenes in the chain of command.”
“It’s his way of abusing power across the board. It’s a big mistake. A big mistake, and I would not do that,” the former vice president and Democratic hopeful added.
Powell has stressed the importance of the Fed’s independence from political influence throughout his tenure, almost always in response to the president’s criticisms.
Though other presidents have tried to coerce the Fed into accommodative monetary policy in the past, prior criticism by presidents has been less personal and less frequent. But Trump has for nearly two years made his displeasure with the Fed and its course of policy well known in Washington and on Wall Street.
Federal Reserve Chairman Jerome Powell reacts during a press conference in Washington D.C., the United States, on July 31, 2019.
Liu Jie | Xinhua | Getty Images
The president lambasted what he considered multiple restrictive interest rate hikes throughout 2018, telling The Washington Post last November that he’s “not even a little bit happy” with his appointment of Powell to the top post at the Fed.
Asked by the Wall Street Journal in October 2018 if he regrets nominating Powell, he said: It’s “too early to tell, but maybe.”
But the president has done little to abate his verbal assault, even as the Fed changed course in 2019 and eased borrowing costs at multiple points throughout the year.
Trump railed against Powell two months ago, asserting that “people are VERY disappointed in” the Fed chairman despite the central bank’s third interest rate cut this year.
“China is not our problem, the Federal Reserve is!” Trump tweeted. “We will win anyway.”
Trump instead would rather the Fed gut interest rates down to zero or even into negative territory, a rare rate phenomenon that many economists argue would bring more harm than good to the U.S. economy.
Trump contends, however, that the current level of rates puts the U.S. at a competitive disadvantage with other countries with which it trades, and cites historically low levels of inflation as proof the central bank can afford to juice the economy with lower rates.