President Donald Trump thinks the Federal Reserve's policies are a greater threat to U.S. economic growth than a burgeoning trade war with China. Mr. Trump told The Washington Post on Tuesday: "I think the Fed is a much bigger problem than China."
Mr. Trump added that he is "not even a little bit happy" with Fed Chairman Jay Powell, whom he selected last year.
The president has focused his ire on the Federal Reserve amid a volatile stock market, which Mr. Trump has blamed on the central bank's decision to steadily raise rates. In the Fed's view, the rate increases are necessary to raise borrowing costs and keep the economy balanced between maximum employment and controlled inflation. Mr. Trump wants the Fed to focus on economic growth.
"I'm not being accommodated by the Fed. I'm not happy with the Fed," Mr. Trump said in the interview. "They're making a mistake because I have a gut, and my gut tells me more sometimes than anybody else's brain can ever tell me."
Economists say the Federal Reserve is closely monitoring financial and economic risks in making its rate decisions, and they expect another rate hike in December. The gradual increases have trickled through to higher interest rates on all types of loans, from mortgages to credit card borrowing.
Yet the job market remains strong, and consumer confidence, while dipping slightly, remains near an 18-year high. The "paradox" of the turbulent stock market could be due to a number of factors, including trade tensions caused by Mr. Trump's policies and a slowdown in the tech sector, according to Oxford Economics.
"Looking ahead, we foresee GDP growth slowing from 3 percent y/y today to 2.0 percent y/y by year-end 2019," wrote Greg Daco, chief U.S. economist at Oxford Economics, in a research note last week. "We continue to expect three Fed rate hikes next year, but tightening could be slower if the economy hits speed bumps along the way."
Mr. Trump stressed that President Barack Obama had "zero interest" during his term and added, "I'm not playing by the same rules as Obama." While the Federal Reserve prefers to keep the Fed funds rate between 2 percent to 5 percent, it dipped close to zero after the financial crisis, which occurred shortly before Mr. Obama took office. The central bank's goal then was to spur investment and stimulate the economy. It held that rate steady until 2015.
"Obama had zero interest to worry about; we're paying interest, a lot of interest," Mr. Trump said. "He wasn't paying down -- we're talking about $50 billion lots of different times, paying down and knocking out liquidity. Well, Obama didn't do that."
He added: "I think that the Fed is way off base with what they're doing."