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President Trump on Friday called on the Federal Reserve to cut interest rates and take additional steps to stimulate economic growth, his latest attempt to put the traditionally independent central bank under his thumb.
Speaking to reporters before traveling to the southern border, Mr. Trump once again criticized the Fed’s interest rate increases in 2018, saying “they really slowed us down.” The president, who is presiding over one of the longest sustained economic expansions in United States history, also said the Fed should do more to give the economy a lift.
Mr. Trump’s comments coincide with his efforts to install allies at the Fed as he heads into a re-election campaign that will largely be a referendum on the state of the economy. While the economy is still strong, the effects of Mr. Trump’s $1.5 trillion tax cut are waning and his trade war has begun to hurt some American industries, as well as contributing to slower growth in China.
Mr. Trump said on Thursday that he planned to nominate Herman Cain, a Republican who abandoned his 2012 presidential campaign in the face of sexual harassment allegations, to a seat on the Fed’s seven-member board. Mr. Trump also plans to nominate Stephen Moore, an adviser and conservative economist who has become a vocal critic of the Fed’s interest rate increases, to the central bank’s board.
Mr. Trump, escalating his previous critiques of the Fed, called on Friday for policymakers to return to a policy of so-called quantitative easing: buying assets like Treasury bonds and mortgage-backed securities as a way of stimulating economic growth. The Fed gobbled up more than $4 trillion worth of bonds, increasing the supply of money in the financial system and encouraging investors to get back into the market.
The Fed has since stopped the practice and, until recently, had been going in reverse — slowly winnowing its huge balance sheet, a process known as quantitative tightening.
“Well I personally think the Fed should drop rates,” Mr. Trump said. “I think they really slowed us down. There’s no inflation. I would say in terms of quantitative tightening it should actually now be quantitative easing. Very little if any inflation. And I think they should drop rates, and they should get rid of quantitative tightening. You would see a rocket ship. Despite that we’re doing very well.”
Larry Kudlow, Mr. Trump’s top economic adviser, said on Thursday that the president was not trying to infringe on the Fed’s independence but said he wants to ensure the Fed’s actions encourage economic growth.
“We’re not pressuring. We’re not going after their independence,” he said in an interview on Bloomberg Television. “We just don’t want any threats to this rebuilding, reviving, growing economy.”
The president has become increasingly bold in his efforts to influence the Fed, which he and his advisers blame for economic growth falling short of the 4 percent annual rate last year as he promised. He has repeatedly criticized his handpicked Fed chairman, Jerome H. Powell, and has described the Fed as a counterweight to his economic policies.
The president’s comments came amid an economy that, despite some signs of weakness, continues to be doing quite well. The Labor Department reported on Friday that employers added 196,000 jobs last month, a rebound from an unexpectedly lackluster February. Economic analysts surveyed by FactSet had expected a gain of about 170,000 jobs in March. It was the 102nd straight month of job gains.
[Read more about the March jobs report, which showed a return to solid growth.]
The Fed raised interest rates four times last year, to the current range for its target interest rate of 2 percent to 2.25 percent, drawing frequent and historically unusual criticism from Mr. Trump in the process.
But the Fed has since diverted from what had been a steady march of interest-rate increases, in the face of stock market turmoil, growing domestic and global economic risks and pressure from Mr. Trump. The central bank projects a slower pace of economic growth this year than in 2018 and has cut its growth projections to 2.1 percent.
At the Fed’s most recent meeting, in March, Mr. Powell emphasized that the central bank would take a “patient” approach, and he did not rule out cutting interest rates if data showed the economy faltering.
Mr. Kudlow acknowledged that the White House, which has continued to project robust economic growth at home, is considered about economic distress abroad.
“We are facing a worldwide slowdown. You know, recession, arguably,” Mr. Kudlow said. “Europe is not doing well. Germany itself may be in recession. That troubles us.”
Lawrence Summers, a former Treasury secretary under President Bill Clinton and the chairman of the National Economic Council under President Barack Obama, said Mr. Trump’s comments suggested the president’s “raw, total confusion” on monetary policy.
“The president publicly debating the Fed undermines confidence in our currency and our country,” Mr. Summers said in an interview. “Easing is probably premature. And if we were going to ease, the right way would be rate cuts, not bond buying.”