WASHINGTON: US President Donald Trump on Tuesday called on the Federal Reserve to cut the benchmark interest rate significantly, moments before the central bank was due to open its two-day policy meeting.
“I would like to see a large cut,” Trump told reporters at the White House, his latest move in a constant campaign to pressure monetary policymakers.
“I’m very disappointed in the Fed,” he said.
Markets overwhelmingly expect the central bank on Wednesday will cut in the key lending rate by 25 basis points — the first cut in more than a decade — amid a slowing global economy impacted by trade uncertainty and sluggish business investment.
That would undo the Fed’s most recent increase in December, which was the last of four in 2018 and the US economy picked up steam.
But Trump seems to be calling for a deeper cut of 50 basis points or perhaps more. But a cut of that size is typically used only when the economy is experiencing a steep slowdown.
The current economic expansion is now entering its 11th year, making it the longest on record. And with steady job growth, low unemployment and asset prices running high, economists are split as to whether the world’s largest economy needs stimulus.
But the Commerce Department on Tuesday also reported that inflation remained tame last month, confirming that there is slim likelihood of a breakout in price pressures.
Other economists say rate increase in December was a mistake.
Fed Chairman Jerome Powell, the target of Trump’s ceaseless barbs, has signaled the bank is likely to lower rates due to economic uncertainties, including Trump’s protracted trade wars with China and Europe which has caused business investment to fall sharply.