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Trump escalates his criticism of Federal Reserve

WASHINGTON — Before this week, it had been more than a quarter-century since a sitting U.S. president publicly pressured the independent Federal Reserve on interest rates.

On Friday, President Trump did it for the second day in a row. In unprecedented back-to-back statements, Trump escalated his criticism of the nation’s central bankers for, in his view, hurting the economy by continuing to inch up their benchmark rate in a process known as monetary policy tightening.

After saying Thursday in a CNBC interview excerpt that he was “not thrilled” by the Fed’s recent rate increases, Trump took to Twitter on Friday morning to say the hikes were “taking away our big competitive edge” with China and the European Union.

“The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done,” Trump tweeted. “Debt coming due & we are raising rates — Really?”

Analysts essentially reacted the same way — really? — in response to the rare public criticism of the Fed from a sitting president.

They questioned Trump’s understanding of monetary policy and global economics while warning of the danger of the Fed making interest rate decisions based on short-term political calculations instead of what’s best for the economy over the long term.

Trump’s comments were even more confounding because he handpicked Fed Chairman Jerome Powell and referred to him in the CNBC interview as “a very good man.”

“I guess the good man’s not doing what he wants,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York and a close follower of the Fed. “Very plainly, he’s not in favor of rates going higher. It’s very explicit.”

After the CNBC comments aired Thursday, the White House issued a statement saying Trump respected the Fed’s independence and “is not interfering with Fed policy decisions.” But Trump doubled-down on his criticism Friday, raising concerns he was launching a campaign to pressure the Fed.

“The average person in the street obviously will agree. Nobody likes high interest rates,” said Sung Won Sohn, chief economist at SS Economics, an economic consulting firm in Los Angeles. “But a president making such a statement I think is unfortunate.”

The last time a sitting president publicly pressured the Fed on interest rates was in June 1992.

President George H.W. Bush, who was in a tough reelection battle, told The New York Times, “I’d like to see another lowering of interest rates. I can understand people worrying about inflation. But I don’t think that’s the big problem now.”

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