AP Photo/Alex Brandon
- President Donald Trump urged the Fed to slash borrowing costs just as it began its first policy meeting of the year on Tuesday.
- He suggested that would allow the government to rein in federal borrowing that has swelled to historic highs under his administration.
- “We would then focus on paying off & refinancing debt!” he said. “There is almost no inflation-this is the time (2 years late)!”
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President Donald Trump renewed attacks on the Federal Reserve on Tuesday, urging the independent central bank to slash borrowing costs just as it began its first policy meeting of the year.
“The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard,” the president wrote on Twitter.
Trump suggested that would allow the government to rein in federal borrowing that has swelled to historic highs under his administration, despite campaign pledges to eliminate red ink within eight years.
“We would then focus on paying off & refinancing debt!” he said. “There is almost no inflation-this is the time (2 years late)!”
Fueled by Republican tax cuts and bipartisan spending sprees, the budget deficit topped $1 trillion last year for the first time since 2012. Fed Chairman Jay Powell has urged Congress to reduce the gap, saying that lower interest rates reduce risks that high levels of debt present to the economy.
“It does not mean that we can ignore deficits at all,” he said at a congressional hearing in November. “The debt is growing faster than the economy in nominal terms. That, by definition, is unsustainable.”
The White House regularly pressures the Fed to take aggressive steps to juice growth ahead of the November election, arguing that the central bank has put the US at a disadvantage against other countries.
Trump has sought to shift blame for any economic issues onto Fed officials and attempted to place allies at the top of the central bank, which considers independence from political influence to be essential to its existence.
The Fed lowered its benchmark interest rate three times last year as concerns about tariffs and other policy uncertainty escalated, bringing it to a historically low range of between 1.5% and 1.75%.
With a strong labor market and reduced trade tensions, policymakers are expected to signal no need for further cuts at the end of a two-day policy meeting on Wednesday.
