weather icon Clear

President’s adviser renews call for Fed to cut key interest rate

WASHINGTON — A top Trump administration official on Friday called on the Federal Reserve to cut its key interest rate by a half-percentage point.

Larry Kudlow, head of the president’s National Economic Council, said in an interview with CNBC that the Fed should do more to help the economy by cutting rates. It signaled last week that it expected to keep rates unchanged for this entire year after raising its benchmark rate four times in 2018 to the current level of 2.25 percent to 2.5 percent.

Kudlow said his comment reflected the president’s views but he denied it was an effort to pressure the Fed, which was set up as an independent body to provide assurances to financial markets that its actions on rates would be free of political influence.

“I am echoing the president’s view. He has not been bashful about that view. He would also like the Fed to stop shrinking its balance sheet,” Kudlow said.

Later Friday, Trump sent out a tweet repeating attacks he has been making about the Fed’s rate hikes. “Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0% GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!” Trump said in his tweet.

Last week, Trump announced he was nominating Stephen Moore, a former Trump campaign adviser and frequent Fed critic, to one of two vacancies on the seven-member Fed board.

In an earlier interview with Axios, an internet news site, Kudlow was quoted as saying he would like to see the Fed “immediately” cut its rates by one-half percentage point. But in his CNBC interview, Kudlow said “immediately” may have been a misquote. “But at some point, I wouldn’t mind seeing the Fed drop their target rate.”

Kudlow said there was no “emergency” that was causing him to go public with his desire for a sizable Fed rate cut, although he did refer to the recent “inversion” of the yield curve, a development in which a short-term rate goes above a longer-term rate. In the past, such an inversion has been a good predictor of a future recession.

But Kudlow insisted that while the economy has slowed, the labor market and underlying growth in consumer spending and business investment have remained strong.

At its last meeting in mid-March, the Fed kept its target rate unchanged and signaled that it now expected to keep rates steady for the whole year. That represented a change from December when it had signaled that it expected to make two rate hikes this year.

Kudlow’s call for a sharp rate cut by the Fed is in stark contrast with President Trump’s touting of the U.S. economy, which he says is in its best shape in decades. Typically, the Fed raises rates when the economy sizzles, to prevent inflation from accelerating.

“The economy is roaring,” Trump said Thursday night at a rally in Grand Rapids, Michigan. “America is now the hottest economy anywhere on the planet Earth.”

Even with nine rate hikes beginning in December 2015, the short-term interest rate the Fed controls is still at historically-low levels. It is typically much higher when the economy is strong: It was 5.25 percent in 2007, before the Great Recession, and was 6.5 percent in the summer of 2000, the last time the unemployment rate fell below 4 percent. It now stands at 3.8 percent.

Most economists think the relatively low short-term interest rate is justified because inflation is so low. Others say it points to longer-running challenges facing the U.S. economy: With the population aging and productivity low, it is harder to generate rapid economic growth and the inflation that often comes with it.

AP Economics Writer Christopher Rugaber contributed to this report.

Don't miss the big stories. Like us on Facebook.
Politics Videos
Media's Double Standard On Incitement And Trump - Video
Over the weekend, an Elizabeth Warren-supporting socialist who opposed gun violence used a rifle to commit a mass murder in Dayton, Ohio. The media has downplayed that aspect of the tragedy.
Project Our Care Tour Kicks Off In Las Vegas
U.S. Rep. Dina Titus joined health care advocates and local residents as part of Protect Our Care’s nationwide bus tour kick off in Las Vegas on Monday, August 5, 2019. (Mat Luschek / Review-Journal)
Bernie Sanders talks about guns, response to El Paso shooting
Sen. Bernie Sanders spoke about his response and continued policy ideas about guns and gun control to the Review-Journal after a panel of other topics. (Rachel Aston/Las Vegas Review-Journal)
Pete Buttigieg On Gun Control And Climate Change - Video
Pete Buttigieg talks about his campaign for the 2020 election and how Nevada is a vision of what the future can be.
Beto O'Rourke speaks in Las Vegas
Presidential candidate Beto O'Rourke spoke to supporters at the East Las Vegas Community Center in Las Vegas, Thursday, Aug. 2, 2019. (Las Vegas Review-Journal)
Former Nevada Senate leader Kelvin Atkinson sentenced to prison
Former Nevada Senate Majority Leader Kelvin Atkinson, who pleaded guilty to misusing campaign funds, was sentenced to 27 months in prison on Thursday, July 18, 2019. (Mat Luschek/Las Vegas Review-Journal)
Trumps Strength is also a Weakness - Video
One of Donald Trump’s greatest strengths — his ability to shape national narratives — is also a great weakness.
Tax the Rich Bus Tour makes a stop in Las Vegas - Video
The Tax the Rich Bus has stopped in Las Vegas as part of its summer tour. (Las Vegas Review-Journal)
Assemblywoman Daniele Monroe-Moreno hosts BBQ - Video
Assembly Woman Daniele Monroe-Moreno hosts BBQ to bring the community together to hear about the candidates up for election and for people to gather and have fun.
Democrat Virtual Caucus - Video
Elizabeth Warren visits Las Vegas
Senator Elizabeth Warren made a campaign stop at the East Las Vegas Community Center on Tuesday July 2, 2019. (Mat Luschek / Review-Journal)
Aaron Ford Speaks About Bill AB431
AB431 is a bill sponsored by Nevada Assembly Speaker Jason Frierson to restore the right to vote for formerly incarcerated individuals. Attorney General Aaron Ford spoke at the AM&E Church in North Las Vegas about the bill, on Monday, July 1, 2019. (Mat Luschek/Las Vegas Review-Journal)
The Right Take: Biden's Racially Questionable Comments
Joe Biden has uttered racially charged statements for years. Now that he’s the frontrunner for the Democrat presidential nomination, he may finally face prolonged scrutiny for them.
Christopher Rufo Discusses Homelessness In The USA - VIDEO
Christopher Rufo discusses homelessness in the United States and how politicians can work to improve conditions for those with drug addictions.
Clark County 2019 Election Results - Video
The 2019 Elections wrap up in Clark County including an upset in the Boulder City Mayor race.
Olivia Diaz talks about her win in Ward 3 - VIDEO
Las Vegas City Councilwoman-elect Olivia Diaz talks about her election win in Ward 3 and what lies ahead for her.
Greene discusses Read by 3 and Opportunity Scholarships - VIDEO
The Nevada Legislative Session is over and the results are mixed for Nevada students, according to Tom Greene, Senior regional legislative director, Excel in Ed in Action.
Bernie Sanders visits Las Vegas
Sen. Bernie Sanders made a stop at Roy W. Martin middle school on Thursday, during his campaign trail.
Pentagon conducts 1st test of previously banned missile

The test off the coast of California on Sunday marked the resumption of an arms competition that some analysts worry could increase U.S.-Russian tensions.

US prisons chief removed in wake of Epstein’s death

Attorney General William Barr has removed the acting director of the Bureau of Prisons from his position more than a week after millionaire financier Jeffrey Epstein took his own life while in federal custody.

‘Absurd’ is Danish PM’s response to Trump wanting to buy Greenland

Greenland is not for sale and U.S. President Donald Trump’s idea of buying the semi-autonomous Danish territory in the Arctic from Denmark is “an absurd discussion,” Denmark’s prime minister said.

Report: US talks secretly to Venezuela’s socialist leader

The goal of the outreach is to ratchet up pressure on the regime by contributing to the knife fight the U.S. believes is taking place behind the scenes.