President Trump on Monday blamed his handpicked Federal Reserve chief for a deepening U.S. manufacturing slowdown, his latest attempt to scapegoat the central bank for the economy.
Trump again accused the Fed and Chairman Jerome Powell of hindering U.S. manufacturers by artificially inflating the value of the dollar. The president has argued for 15 months that the Fed has kept interest rates too high and should flood the economy with cheaper money to manipulate the value of the dollar.
A cheaper U.S. dollar would make American products relatively less expensive in foreign markets, and greater Fed stimulus could juice the economy before the 2020 election.
Manufacturers are being held back by the strong Dollar, which is being propped up by the ridiculous policies of the Federal Reserve – Which has called interest rates and quantitative tightening wrong from the first days of Jay Powell!
— Donald J. Trump (@realDonaldTrump) December 2, 2019
“The Fed should lower rates (there is almost no inflation) and loosen, making us competitive with other nations, and manufacturing will SOAR! Dollar is very strong relative to others,” Trump added in a second tweet.
His latest attack on Powell followed the release of data Monday showing the fourth straight month of decline in U.S. manufacturing activity. The Institute for Supply Management’s Purchasing Managers’ Index measured 48.1 percent, falling 0.2 percentage points from October and remaining below the 50 percent threshold considered a contraction.
The U.S. industrial sector has suffered under the cost and retaliation spurred by Trump’s tariffs and a decline in global demand driven by economic headwinds. Even so, the U.S. economy has maintained solid — if slowing — growth, keeping the value of the dollar relatively high.
The Fed has cut interest rates three times in 2019 after issuing seven hikes since Trump took office in 2017. Powell, who took over the Fed on Trump’s appointment in 2018, suggested last month the bank is unlikely to move interest rates again unless the economy falters or inflation spikes.
Trump insists that the Fed should “match” efforts from central banks in Europe and Asia to cut interest to near-zero or negative levels despite the relative strength of the U.S. economy. The claim is only one of several accusations of economic sabotage Trump has lobbed at the Fed since July 2018.
Powell, reflecting the consensus of most economists, pushed back on Trump’s request in congressional testimony last month. The Fed chairman said it would be inappropriate for the bank to offer crisis-level stimulus while the U.S. economy remains steady.
“Our economy is in a strong position. We’ve got growth. We have a strong consumer sector. We have inflation a bit below target,” Powell said on Nov. 13. “So, the very, very low and even negative rates that we see around the world would not be appropriate for our country.”