Trump bashes Fed’s rate cut
President Trump on Wednesday lashed out at the Federal Reserve after stocks sold off following the central bank’s first rate cut in more than a decade.
The Dow Jones Industrial Average tumbled by more than 330 points after the Fed on Wednesday lowered its benchmark interest rate by 25 basis points to a range between 2 percent and 2.25 percent. The decision fell short of the “large” rate cut the president had been calling for, and disappointed market participants who were calling for a 50 basis point cut.
“What the Market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, The European Union and other countries around the world,” Trump tweeted.
But that’s not what the market got. At the press conference following the decision, Fed Chairman Jerome Powell said, “Let me be clear – it’s not the beginning of a long series of rate cuts.” Powell also added that he didn’t say there would be “just one rate cut.”
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The president for months has been criticizing the central bank, and ahead of Wednesday’s decision, he reiterated his concerns.
“The Fed moved, in my opinion, far too early and far too severely,” Trump told reporters on Monday, adding that he wanted to see the central bank’s quantitative tightening, or the shrinking of its balance sheet, come to an end. The central bank had raised rates nine times since 2015 as it attempted to normalize policy in the aftermath of the Great Recession.
The president didn’t go to sleep entirely disappointed on Wednesday as the central bank ended the shrinking of its balance sheet, which had ballooned from $870 billion to a high of $4.5 trillion following the financial crisis. It had been reduced to about $3.8 trillion by Wednesday’s decision.
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“As usual, Powell let us down, but at least he is ending quantitative tightening, which shouldn’t have started in the first place – no inflation, the president said in a follow-up tweet. “We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”