Fed Chairman Jerome Powell spent 2019 as one the president's favorite punching bags. But the central bank has also given Trump’s presidency a boost heading into the 2020 election.
Jerome Powell spent 2019 as one of President Donald Trump’s favorite punching bags, the unhappy recipient of dozens of angry tweets blaming him for anything and everything wrong with the U.S. economy. He regularly endured rumors that Trump would try to fire him.
The Fed began its campaign of three rate cuts in July when fear of an impending recession driven by Trump’s trade conflicts and rampant business uncertainty gripped markets, threatening to undermine his argument that despite all the noise around his presidency — including likely impeachment in the House — he had delivered robust growth.
“The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” Trump tweeted on Sept. 11, one of his many salvos against the Fed and its leader. “A once in a lifetime opportunity that we are missing because of ‘Boneheads.’”
The central bank feared a rapid pickup in prices at that time, but the unemployment rate has continued to drop, hitting 3.5 percent in November, and inflation is still hovering a bit below the Fed’s 2 percent target. Trump despised the hikes and regularly demanded immediate cuts, even calling for the Fed to reduce rates below zero — an extreme stimulus measure that the central bank has never used — all while also boasting that the economy was the best it has ever been.
Markets were initially skittish when Powell suggested it was not necessarily a full change in direction. But subsequent cuts and communications from the Fed heartened investors.
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