The Federal Reserve, which has increased interest rates numerous times in the last few years, recently signaled that it does not plan to increase interest rates any more for the remainder of this year.
But if it was up to President Donald Trump, the Fed would be cutting interest rates instead.
Trump, speaking to reporters Friday morning, called on the Fed to decrease interest rates, arguing that the central bank’s policies have held back the economy.
“Well, I personally think the Fed should drop rates,” Trump said Friday. “I think they really slowed us down. There’s no inflation.”
Beyond simply cutting interest rates, Trump also wants the Fed to bring back its policy of quantitative easing, wherein the Fed buys billions in mortgage-backed securities and other bonds to increase liquidity in the market and keep interest rates low.
In the wake of the financial crisis, the Fed enacted QE, but that program ended in late 2017, when the Fed began to dial back its purchases.
But Trump wants QE to return.
“I would say, in terms of quantitative tightening, it should actually be quantitative easing. Very little, if any, inflation,” Trump said. “And I think they should drop rates and they should get rid of quantitative tightening.”
According to Trump, if the Fed were to undertake those policies, the economy would improve dramatically, despite the fact that in Trump’s eyes, things are already going well.
“You would see a rocket ship,” Trump said of his proposed Fed moves. “Despite that, we’re doing very well.”
It should be noted that the Fed operates independently of the executive branch and, quite simply, doesn’t have to do what Trump says. But his comments shouldn’t be taken lightly either.
The leader of the free world wants the Fed to cut interest rates. Whether it happens or not is an entirely different question.
Courtesy: Ben Lane, HousingWire Newsletter.
