President Donald Trump is not letting up on his attacks on the Federal Reserve, calling for “substantial” Fed rate cuts to allow the dollar to fall in value against foreign currencies.
In a series of tweets Thursday, Trump said, “As your president, one would think that I would be thrilled with our very strong dollar. I am not!”
Trump said that the Fed’s high level of interest rates in comparison to other countries was keeping the dollar too strong and making it more difficult for U.S. manufacturers to compete.
The Fed reduced its key policy rate by a quarter-point last week, but Trump is pushing for more interest rate cuts. Those cuts can lower the dollar’s value against other currencies, although other factors are also at play.
The dollar’s value is affected not only by relative interest rates in the United States compared to other countries but also factors such as economic growth rates and foreigners’ investment opportunities. At the moment, the U.S. economy, while slowing, is still performing better than most other major economies.
“With substantial Fed cuts (there is no inflation) and no quantitative tightening, the dollar will make it possible for our companies to win against any competition,” Trump tweeted.
Trump said that while the United States had the greatest companies in the world, “unfortunately the same cannot be said about our Federal Reserve. They have called it wrong at every step of the way, and we are still winning. Can you imagine what would happen if they actually called it right?”
Economists believe the possibility of future rate cuts has gone up sharply since Trump last week threatened to impose more tariffs on Chinese products by Sept. 1, widening a trade war between the world’s two biggest economies that has jolted financial markets.
Four former Fed leaders—Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen—said in an opinion piece published in The Wall Street Journal on Tuesday that the Fed’s political independence must be protected and called it wrong to threaten to remove or demote Fed leaders, as Trump has done.