Former Philadelphia Federal Reserve President Charles Plosser said President Trump’s attacks on Federal Reserve Chairman Jerome Powell are very discouraging.
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“I think presidents have always tried to influence the Fed. But they tend to do it behind the scenes quietly — not this one,” he told FOX Business’ Maria Bartiromo on Wednesday. “I think that’s bad.”
In October Trump launched a vocal attack on the Fed saying that it is his “biggest threat” because it is “raising rates too fast, and it’s too independent.”
Trump on Tuesday continued his assault saying the Fed shouldn't raise rates but called Powell “a good man.”
“I think he’s a good man. I think he’s trying to do what he thinks is best. I disagree with him. I think he’s being too aggressive, far too aggressive, actually far too aggressive,” Trump told Reuters.
While past presidents have generally steered clear of criticizing the Fed publicly because its independence has been seen as vital to economic stability, Plosser said Trump is putting the Fed in a “no-win situation” because if they slow down their interest rate increases at a slower-than-expected pace, they would be accused of giving in to political pressure. However, if they continue to raise them, they would be accused of brushing off political pressure. As a result, people will lose trust in the Fed.
“The Fed runs the risk of losing public confidence by succumbing to political pressure one way or another,” he said.
The Fed this month is expected to raise rates for the fourth time this year. An additional three rate hikes are expected in 2019. The fed funds rate is currently in a target range of 2 percent to 2.25 percent.