WASHINGTON — President Donald Trump is keeping up his attacks on Federal Reserve Chairman Jerome Powell, saying he “made” Powell but now would like to trade him in for Mario Draghi, the head of the European Central Bank.
In an interview on the Fox Business Network, Trump said Wednesday “we should have Draghi” instead of Powell because of Draghi’s announcement last week that he was prepared to provide more stimulus if necessary to support the lagging European economy.
Trump said that in contrast, Powell was “sucking (money) like from a vacuum cleaner,” a reference to the Fed’s efforts to lower its holdings of Treasury bonds.
The president said of Powell, “Here’s a guy nobody ever heard of him before and now, I made him and he wants to show how tough he is.”
Trump selected Powell to be Fed chairman after deciding not to nominate Janet Yellen for a second four-year term. Powell, a Republican, had been nominated to the Fed’s seven-member board by Barack Obama.
Powell took over as chairman in February 2018. As the Fed kept raising interest rates last year, Trump increased his criticism of the central bank and Powell. Trump has complained that last year’s four rate hikes sent the stock market into a nosedive in December as investors feared the Fed’s tightening could push the country into a recession.
The Fed switched course in January and declared it was prepared to be “patient” before changing rates again, a move that bolstered the stock market until rising trade tensions between the United States and China again raised recession fears last month.
Last week, the Fed left rates unchanged and signaled that it was prepared to begin cutting rates if needed to protect the economy from trade battles and other risks.
In his interview Wednesday, Trump did not acknowledge the Fed’s change in policy. Before last week’s meeting, he had pressured the central bank to begin cutting rates immediately and suggested that he might demote Powell as chairman if the Fed did not follow his advice.
In his interview Wednesday, Trump insisted he had the right to demote Powell or to fire him, something that legal experts dispute. They contend that Powell can only be removed for malfeasance in office, not for a policy dispute. Powell’s term as chairman runs until February 2022.
Trump said one reason he’s unhappy with the Fed’s rate hikes was that it raises the cost of borrowing for the federal government.
“I want to pay it off,” Trump said of the debt, a pledge he had made during the 2016 presidential campaign. The growth of the $22 trillion national debt has accelerated under Trump whose last budget projected annual deficits would top $1 trillion beginning this year.
Trump’s latest Fed attack came a day after Powell made his most extensive comments on the Fed’s need for political independence to do its job.
Asked about the repeated criticism by Trump, Powell said, “We are human. We make mistakes. I hope not frequently but we will make mistakes. But we won’t make mistakes of integrity or character.”
Powell said that the Fed’s independence from direct political control had served the country well and when central banks do not have that protection “you see bad things happening.”