Trump blames Fed, not China, for economic woes

President TrumpDonald John TrumpSanders urges impeachment trial 'quickly' in the Senate US sending 20,000 troops to Europe for largest exercises since Cold War Barr criticizes FBI, says it's possible agents acted in 'bad faith' in Trump probe MORE on Wednesday accused the Federal Reserve of doing more harm to the U.S. economy than China has, pushing the central bank to slash interest rates to aid his trade agenda.

In a series of tweets, Trump ripped the Fed for maintaining higher interest rates than other central banks while the president sought to strike tougher trading terms with economic partners.

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“Our problem is not China,” Trump tweeted. “Our problem is a Federal Reserve that is too proud to admit their mistake of acting too fast and tightening too much.”

“They must Cut Rates bigger and faster, and stop their ridiculous quantitative tightening NOW,” Trump added, referring to Fed’s ongoing sale of bonds purchased to stimulate the economy during the 2008 recession. 

 

Trump has bashed the Fed for more than a year, accusing the independent central bank of hindering the economy by raising rates four times in 2018. The Fed has since reversed course, cutting rates in July amid economic uncertainty triggered in part by Trump’s trade war.

Trump's latest attack on the Fed comes as trade tensions between his administration and China have reached new heights. The president announced last week that he would impose new tariffs on Chinese goods, which prompted Beijing to reduce the value of its currency Monday and halt imports of American agricultural products. 

Stock markets plunged soon after, but recovered Tuesday after China stabilized the value of its currency in the wake of the Treasury Department labeling the country a currency manipulator

The escalating trade war between the U.S. and China has added new risks to a souring global economic outlook.  

Trump's tweets referenced Wednesday decisions from the central banks of India, New Zealand and Thailand to cut rates to levels below what economists had projected. The moves triggered deeper concern about the health of the global economy, which has slowed significantly over the past two years.

The Fed has maintained relatively higher interest rates than other central banks because of the relative strength of the U.S. economy. Fed Chairman Jerome Powell explained in July that the bank decided to cut rates in part to protect the U.S. economy from global shocks.

"The performance of the economy has been reasonably good, the positioning of the economy is as close to our objectives as it's been in a long time, and the outlook is also good," Powell told reporters Wednesday.

"But again, the issue is more the downside risks and the shortfall and inflation and we're trying to address those.”

Even so, Trump has repeatedly pressured the Fed into cutting rates to give the president an upper hand in trade talks.

Lower interest rates would reduce the value of the dollar, which would make U.S. goods relatively less expensive to foreign buyers without domestic producers losing profits.

“Incompetence is a terrible thing to watch especially when things could be taken care of sooo easily,” Trump tweeted. 

“We will WIN anyway, but it would be much easier if the Fed understood, which they don’t, that we are competing against other countries, all of whom want to do well at our expense!”