Trump on the Fed: The central bank is "my biggest threat"

President Donald Trump said the Federal Reserve is raising interest rates "too fast," calling the central bank "my biggest threat."

Mr. Trump said he doesn't speak with Chairman Jerome Powell because of the Fed's political independence but he said, "I'm not happy with what he's doing because it's going too fast" in raising rates at a time when inflation has remained relatively low.

Asked about his decision as president to replace Janet Yellen with Powell, Mr. Trump said: "Can I be honest, I'm not blaming anybody. I put him there and maybe it's right, maybe it's wrong but I put him there."

Mr. Trump made his comments in an interview with Fox Business Network's Trish Regan. Critics have expressed concern that his continual attacks on the Fed, which began in the summer, threaten its need to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.

Last week, in a series of comments, Mr. Trump called the Fed "out of control," although he said in response to a question that he would not seek to oust Powell as chairman.

Federal Reserve's rate hikes

The Federal Reserve last month raised a key interest rate for the third time this year, indicating the central bank's view that the economy is on solid ground. Under Powell, the Fed has been gradually raising rates as the economy has strengthened as a way to prevent a run-up in inflation.

Fed policymakers have upgraded their assessment of the economy, now predicting that GDP growth would hit 3.1 percent for the year, according to newly release projections. In the long term, however, they expect growth to slow to 2 percent and drop further after 2021. The Fed also expects the unemployment rate next year to dip to 3.5 percent -- that would be the lowest jobless rate since 1969. 

"As the year has gone on, the economy has come in stronger than we expected," Fed Chairman Jerome Powell told reporters last month, saying tax cuts and high government spending have boosted growth. 

Stock market volatility

Mr. Trump's earlier remarks came in a week when the stock market, which the president has often cited as a barometer for his stewardship of the economy, was plunging. Mr. Trump blamed the Fed's string of rate hikes for the market turmoil.

Mr. Trump's comments Tuesday came on a day when the stock market staged an enormous comeback — its biggest one-day rally in six months — on the strength of healthy earnings from financial and health care companies and encouraging reports on the economy. The Dow Jones Industrial Average jumped 547 points.

Late last week, Treasury Secretary Steven Mnuchin said that despite Mr. Trump's attacks on the Fed, the president respects the central bank's independence. Mnuchin said Mr. Trump's complaints simply reflected his preference for low interest rates.

In February, Mr. Trump tapped Powell, then a member of the Fed's board, to become chairman after he had decided not to offer Yellen a second four-year term.

In his first two years in office, Mr. Trump has had the rare opportunity to nominate or re-nominate officials for six of the Fed board's seven seats. Despite his criticism of the Fed's policymaking, Mr. Trump's picks have been seen as representing the mainstream of economic thinking about how a central bank should manage interest rates.

In Tuesday's interview, though, Mr. Trump said of his other nominees for the Fed, "I put a couple of other people there I'm not so happy with too but for the most part I'm very happy with people."

Under the law that established the Fed, a president can remove a board member "for cause." But the courts ruled in a case decades ago involving the Federal Trade Commission that this language has to involve more than a policy disagreement between the president and the Fed.