On Friday, President Trump announced a plan that he believes will drastically change the trajectory of the United States economy: having the Federal Reserve lower interest rates.
As Politico reports, the president blames the Fed for slowing the economy: “I personally think the Fed should drop rates. I think they really slowed us down.”
With these rates lowered, Trump claimed, the economy would turn into “a rocket ship.”
“There’s no inflation,” Trump continued. “I would say in terms of quantitative tightening, it should actually now be quantitative easing… You would see a rocket ship.”
Here’s more, from Politico:
He also said the central bank should restart its bond-buying program known as “quantitative easing,” a measure taken by the Fed in the wake of the 2008 financial crisis to stop the collapse of the housing market and restart the economy.
Trump is escalating his long-running battle with the Fed, which he has accused of being the “only problem” facing the economy. He pressed Chairman Jerome Powell for months to halt the central bank’s interest-rate-hike campaign, but is now calling on the Fed to stimulate growth. He has also said he intends to nominate two Fed governors who say they support rate cuts.
Since late 2017, the Fed has been shrinking its bond holdings. It also raised interest rates four times last year to keep prices from rising too rapidly and to wean the economy off cheap debt that could eventually start to threaten the stability of the financial system. That rate hike campaign has now been put on hold while the central bank monitors slowing growth abroad.
“We’re doing very well,” Trump added.
The Bureau of Labor Statistics reported on Friday that nonfarm payrolls expanded by 196,000 jobs, much more than 175,000 estimated from the Dow Jones, CNBC reports.
“With a strong March employment report now in the books, we’ve gotten some reassurance that the labor market is still strong,” Credit Union National Association Mutual Group chief economist Steve Rick said. “Of course, last month’s nosedive was disappointing, especially after December and January had such impressive numbers despite some sizable headwinds. But a good March report shows that February was more of an outlier than a canary in the coal mine.”
As CNBC also reports, Trump believes the U.S. economy can get as high as 5 or 6 percent.
His economic advisers remained more cautious. But they cast sustained growth of 3 percent or more, driven by new, productivity-boosting business investment, as the floor beneath their strategy for making Americans better off and protecting the federal budget.
“The foundation for the plan is 3 percent growth,” budget director Mick Mulvaney told Congress. “In fact, that IS Trumponomics.”