Earlier, Federal Reserve officials indicated that a cut in base interest rates would be unlikely in the coming months due to robust economic expansion.
President Donald Trump has accused the Federal Reserve of stymieing his efforts to win the trade war against China by refusing to listen to his demands to cut interest rates.
Speaking to CNBC’s Joe Kernen on Monday, Trump accused China of gaining a competitive advantage against US producers by devaluing their currency “for years.”
“It’s put them at a tremendous competitive advantage and we don’t have that advantage because we have a Fed that doesn’t lower interest rates. We have a Fed that raises interest rates the day before a bond issue goes out, so we have to pay more money. You tell me about that thinking, ok?” Trump complained.
“We should be entitled to have a fair playing field, but even without a fair playing field – because our Fed is very, very destructive to us – even without a fair playing field, we’re winning, because the tariffs are putting us at a tremendous competitive advantage,” the president added, referring to the ever-escalating US-China trade spat.
Accusing the Federal Reserve of ‘not listening’ to him, Trump charged the regulator with making “a big mistake.”
“They raised interest rates far too fast. That’s number one. Number two, they did quantitative tightening. They were taking in $50 billion a month, $50 billion a month and they’ve now eased that, but it’s still $25 billion a month, which is ridiculous. Now, China’s doing just the opposite. They’re pumping money in. So I’m not – I’m winning, but I’m not winning on a level table,” Trump added.
Trump suggested that his Chinese counterpart Xi Jinping had much greater control over China’s central bank and its policy, adding, meanwhile, that the officials in charge of the Fed, including chairman Jay Powell, were “not my people.”
The long-running trade spat between the US and China continued to escalate on Monday, with Trump threatening to impose fresh tariffs on the remaining $300 billion’ worth of Chinese goods ‘immediately’ if Xi did not meet him at the upcoming G20 meeting in Osaka, Japan later this month to hammer out a trade deal. On June 1, China slapped tit-for-tat tariffs on $60 billion worth of US goods in response to a 15 percent hike in tariffs on $200 billion in Chinese imports in May.
Trump has repeatedly urged the Fed to cut interest rates and to resume quantitative easing in recent months, with the effort expected to grow the US economy and help in the US trade war against Beijing. China has devalued its currency, the yuan, in a bid to take some of the sting out of increasingly stringent US tariffs.