Trump: Fed will be 'derelict in its duties if it doesn't lower the Rate'

Trump: Fed will be 'derelict in its duties if it doesn't lower the Rate'
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President TrumpDonald John TrumpJustice says it will recommend Trump veto FISA bill Fauci: Nominating conventions may be able to go on as planned Poll: Biden leads Trump by 11 points nationally MORE on Thursday said that the Federal Reserve would be “derelict in its duties” if it does not cut interest rates next week, boosting pressure on the bank to stimulate a slowing U.S. economy.

In a Thursday tweet, Trump demanded that the Fed “lower the Rate and even, ideally, stimulate,” to match negative interest rates set by the European Central Bank. 

“Take a look around the World at our competitors. Germany and others are actually GETTING PAID to borrow money,” Trump tweeted.

“Fed was way too fast to raise, and way too slow to cut!”

Trump's tweet comes less than a week before the Fed’s policymaking Federal Open Market Committee (FOMC) holds a two-day meeting in Washington next Tuesday and Wednesday.

The FOMC is widely expected to cut its baseline interest rate range by 0.25 percentage points for the third consecutive meeting. The cuts come after the Fed raised interest rates four times in 2018 over the protests of Trump, who now insists that the bank should zero-out borrowing costs entirely.

Trump’s Thursday tweet is his latest demand for the Fed to implement levels of stimulus not seen since the 2008 recession. While the U.S. economy has slowed throughout 2019, Trump is asking the Fed to mirror efforts used by Europe to reverse an economic retraction across the continent.

The Fed is highly unlikely to meet Trump’s demand unless the U.S. economy enters a recession, which is two consecutive quarters of economic retraction. But the bank has cut rates twice in 2019 already to power the economy through slowing job growth, trade tensions, a manufacturing recession and rising global threats to U.S. prosperity.

Trump has leaned on the Fed and its chairman, Jerome Powell, to boost the economy through near-zero rates and massive purchases of Treasury bonds, even as the U.S enjoys unemployment near record lows and stable growth.

But a slowing economy exacerbated by rising recession fears and trade tensions poses a major political threat to Trump as he eyes reelection in 2020. 

Trump's appeal to swing voters is deeply dependent on the strength of the U.S. economy, which is his most compelling pitch to Americans otherwise uncomfortable with his agenda. The president is also depending on victories in trade talks with China and Europe to fulfill campaign pledges to voters in industrial states, such as Ohio, Michigan, Wisconsin and Pennsylvania, crucial to a winning coalition in 2020.