The Federal Reserve’s decision to cut interest rates by a quarter of a percentage point failed to pacify US President Donald Trump, who has routinely hit out at Fed chair Jerome H. Powell for keeping rates too high. The federal funds target rate range is now 2% to 2.25%.
“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,” Trump wrote on Twitter. “We are winning anyway, but I am certainly not getting much help from the Federal Reserve!”
Trump went on to say that he would like to see further and more aggressive rate cutting going forward.
“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.”
But Trump was not the only one critical of the cut. Two Fed officials also disagreed with the decision, albeit for different reasons.
CNBC reports that Boston Fed President Eric Rosengren and Kansas City Fed President Esther George—who had both expressed misgivings about a potential rate cut—both voted against the measure, arguing that rates ought to remain unchanged.
“Given that the economy is quite strong, given that I do think that inflation is going to be very close to 2%, and given that the growth in the economy is satisfactory, I think that’s an environment where you don’t have to take a lot of action,” Rosengren told CNBC.
Others were critical as well. Chris Rupkey, chief financial economist at MUFG Union Bank, slammed the rate cut as an “unwise decision,” arguing that “The Fed’s decision today is like in the days when doctors bled their patients to heal them.”
He added that, in his view, the Fed “manufactur[ed] reasons to cut interest rates despite a strong economy with no recession signs apparent anywhere out on the horizon.”
The decrease was the first since 2008, when the Fed hacked rates down to almost zero percent in the midst of massive economic fallout caused by the US subprime mortgage crisis.