As the major indexes ran roughshod over investors with more declines on Tuesday, it was U.S. President Donald Trump resorting to familiar behavior as he turned up the volume on his request for lower interest rates.
Since taking office, President Trump has been firing jabs at the Federal Reserve and Chairman Jerome Powell for raising interest rates. Since the last rate hike, the Federal Reserve has now raised interest rates six times versus just once during former president Barack Obama’s tenure.
With a rate announcement looming in December, the president cued up a familiar monologue on his thoughts about rates and the current state of the capital markets in which he aptly pointed out the declines in the tech-heavy Nasdaq Composite, which shed 1.7% on Tuesday.
“I’d like to see the Fed with a lower interest rate. I think the rate’s too high. I think we have much more of a Fed problem than we have a problem with anyone else,” Trump told reporters outside the White House. “I think your tech stocks have some problems.”
Related: Will the Federal Reserve Raise Interest Rates in December?
Denigrating Fed a Recurring Theme
As the major indexes head into bear market territory, President Trump is keen to denigrate the Fed when the capital markets go sour. Following the latest rate hike in September that saw the central bank raise the federal funds rate by 25 basis points to 2.25, Trump took the opportunity at a New York press conference to express his discontent.
“Unfortunately, they just raised interest rates,” said Trump. “I am not happy about that.”
The president did, however, say the Fed’s move was justified as a result of the strength seen in the economy, but also said, “but basically I am a low-interest-rate person.”
In an interview with CNBC earlier this year, Trump already took a shot at the Fed, saying he’s “not happy” about the Federal Reserve’s latest monetary policy moves to raise interest rates. In typical Trump fashion, the president took to social media to say that the U.S. “should not be penalized because we are doing so well.”
….The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates – Really?
— Donald J. Trump (@realDonaldTrump) July 20, 2018
Meanwhile, if a rising chorus of concerns starts to make itself heard regarding higher interest rates–for example, banks fretting that higher rates are dampening their lending businesses or the major indexes continuing their doldrums–this could cause the Fed pause to pause rate hikes in 2019. Until his reelection bid in 2020, Trump doesn’t want the economy to experience an unceremonious fall from grace as a result of rates and as such, any more tightening of monetary policy by the Fed will certainly come under the president’s scrutiny.