US President Donald Trump. — AP
WASHINGTON: Donald Trump says he expects his Federal Reserve (Fed) chair to lower interest rates if the economy is doing well, the latest signal that the president is eager for a nominee committed to borrowing cost cuts as he nears an announcement of his choice to replace Jerome Powell.
“I want my new Fed chairman to lower interest rates if the market is doing well, not destroy the market for no reason whatsoever,” Trump said in a social media post on Tuesday.
“Anybody that disagrees with me will never be the Fed chairman!”
Trump has repeatedly said he’s interested in breaking recent trends, where promising economic data is sometimes met by a market sell-off due to concerns over inflation and corresponding hikes by the Fed.
“In the old days, when there was good news, the market went up,” Trump wrote.
“Nowadays, when there is good news, the market goes down, because everybody thinks that interest rates will be immediately lifted to take care of ‘potential’ inflation.”
Tuesday bucked the trend described by the president. The Bureau of Economic Analysis reported that inflation-adjusted gross domestic product increased at a 4.3% annualised pace in the third quarter, higher than all but one estimate in a Bloomberg survey.
But the S&P 500 rose for the fourth consecutive day, closing at a record high.
Marshall Front, senior managing director at Front Barnett, said the “good news is bad news” paradox dates back decades.
“Sane heads will eventually prevail, and the data will ultimately drive the way people interpret things,” Front said in an interview.
“Wall Street is focused on economic fundamentals. The economy is on strong footing, and that will support corporate profits, and that’s what matters for Wall Street.”
The president’s latest commentary comes as he is looking to new leadership at the Fed to help reduce borrowing costs, as he increasingly feels political pressure to address voter concerns over affordability.
Trump has repeatedly said lower rates could help the housing market, and that he wants to be consulted by his eventual central bank pick on how to navigate rate decisions. — Bloomberg
