Powell tells Trump Fed policy will remain ‘non-political’

Powell tells Trump Fed policy will remain ‘non-political’

President holds ‘cordial’ talks with cental bank chair after months of attacks

The chairman of the Federal Reserve told Donald Trump that the central bank would continue to make monetary policy in a “non-political” manner, during a meeting that followed months of criticism of Jay Powell by the US president.

Mr Trump said he had a “very good & cordial” meeting with the Fed chair on Monday, while the Fed said that Mr Powell had stuck by his insistence that policy would be dictated by the twin goals of stable inflation and maximum employment.

The meeting, which lasted for 30 minutes in the White House residence and was attended by Treasury secretary Steven Mnuchin, had not been not listed in the president’s official public schedule.

“Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc,” Mr Trump wrote on Twitter.

Late on Monday night, the president tweeted: “At my meeting with Jay Powell this morning, I protested fact that our Fed Rate is set too high relative to the interest rates of other competitor countries. In fact, our rates should be lower than all others (we are the U.S.). Too strong a Dollar hurting manufacturers & growth!”

Although Mr Trump appointed Mr Powell as Fed chair, the president has repeatedly criticised him for not implementing looser monetary policy. Mr Trump has at times suggested that he wanted to fire Mr Powell, even though he does not have that power.

The Fed said Mr Powell met the president and Mr Mnuchin to “discus the economy, growth, employment and inflation”. The meeting came after Mr Powell last week testified twice before Congress about the economy and the outlook for interest rates.

“Chair Powell's comments were consistent with his remarks at his congressional hearings last week,” the Fed said in a statement. “He did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy.”

Mr Powell told Mr Trump that the central bank would “set monetary policy, as required by law, to support maximum employment and stable prices . . . based solely on careful, objective and non-political analysis”, the statement went on.

Mr Trump used a speech to the Economic Club of New York last week to accuse the Fed of restraining growth during his tenure. The president said the Fed had put the US at a disadvantage because it had not followed the eurozone by engineering negative rates. “Give some of that money, I want some of that money,” Mr Trump said in the speech.

The criticism has continued despite the Fed lowering interest rates by 75 basis points this year in response to uncertainty arising from the US-China trade war. Mr Trump also used Walmart’s recent quarterly earnings report to jab the Fed, highlighting the retailer’s commentary that inflation was low.

“Do you hear that Powell?” he tweeted last week.

In his congressional testimony, Mr Powell said that he saw little reason to lower rates when the Fed holds its next policy meeting in December. His comments suggested that the Fed had not changed its outlook since its last monetary policy meeting in October, and that it would keep its interest rate target range at 1.5 to 1.75 per cent.

The White House declined to say whether Mr Trump had tried to put pressure on Mr Powell on Monday. The meeting marked the second time this year that Mr Trump has met Mr Powell, following a dinner in February

Mr Trump’s attacks on the Fed come as he gears up his re-election campaign, with voting less than a year away. The president has been campaigning on the strong US economy, and knows that any drop in economic growth could hurt his chances of a second term.

Demetri Sevastopulo  and Matthew Rocco

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