The Federal Reserve is set to cut interest rates for the first time in over a decade, and the news will likely be welcomed by Donald Trump, who has criticized the Fed for raising interest rates too high and too quickly, according to Fox News.
Yesterday, Trump told reporters in advance of the Federal Open Market Committee’s policymaking meeting that he wanted to see rates cut, CNBC reported.
“I would like to see a large cut, and I would like to see immediately the quantitative tightening stop,” he said. “They moved in my opinion far too early and far too severely, and puts me at somewhat of a disadvantage.”
The president also said that he believes the Federal Reserve should have cut rates sooner, adding that the rate hikes that began at the end of 2015 have likely harmed economic growth. Since then, the department has raised rates nine times, all in an attempt to balance the economy after the disastrous events that led to the recession of 2008.
Trump says that he believes the economy is strong despite the Fed’s actions, but he believes that the economy could have been better – growing by 4 percent – had rates not been raised when they were. He also suggested the Dow average would be 10,000 points higher, and that he was “disappointed” by the Fed’s decision.
President Donald Trump again accused the Federal Reserve of holding back the economy and says he would like to see the central bank enact a large rate cut https://t.co/y5IWsNWBJG pic.twitter.com/ovg8Gzy2Gr— CNN Business (@CNNBusiness) July 30, 2019
Since then, the central bank is expected to announce a decision on interest rates on Wednesday, effectively ending a decade of monetary tightening. Josh Wright, former Federal Reserve employee and chief economist at iCIMS, weighed in on the decision.
“The next question is going to be will there be any further cuts after this?” said Wright. “I think certainly these numbers will make it very easy to say one and done. We feel good about it now, and now we need to let this one cut seep through, so you’re going to let that feed through, barring any major developments.”
While the move will likely make the president happy, the Fed’s decision will be a surprising shift for a body that is typically sluggish in changing course.
While the economy continues to expand, it has done so at a reduced rate of 2.1 percent annually, a slowing over previous years. There are also some issues, like the trade war with China that continues to simmer and concerns about how Brexit will impact the U.S. economy, that some fear may harm future growth. The Fed’s move is likely meant to prevent an economic slowdown given those looming issues.