President Donald Trump said on Sept. 16 that the Federal Reserve (Fed) now has another important reason to cut interest rates sharply, one day before its Federal Open Market Committee (FOMC) holds a policy meeting on Sept. 17-18.
The president first slammed the Fed and its chairman Jerome Powell for letting the United States pay “a much higher interest rate than other competing countries,” leading to a strong dollar, which is “really bad” for U.S. exports despite a climate of “no inflation.”
President Trump criticized the central bank for “not watching” after indicating that “producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus.”
“They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue,” President Trump wrote.
The president then suggested he wants a “big interest rate drop” from the Fed, citing “the Oil hit”.
…The United States, because of the Federal Reserve, is paying a MUCH higher Interest Rate than other competing countries. They can’t believe how lucky they are that Jay Powell & the Fed don’t have a clue. And now, on top of it all, the Oil hit. Big Interest Rate Drop, Stimulus!
— Donald J. Trump (@realDonaldTrump) September 16, 2019
President Trump may be referring to oil price surges following attacks on Saudi Arabia oil facilities over the weekend, halving the country’s oil output per day.
Brent crude futures, the international benchmark, soared 19.5% to $71.95 per barrel at the open of Monday, the biggest jump on record, CNBC data shows. Brent closed the session up 14.6% at $69.02.
U.S. West Texas Intermediate futures rose 15.5% to $63.34, the biggest climb since December 2008.
President Trump is putting more pressure on the Fed to cut interest rates as it is scheduled to make an announcement after the meeting on Tuesday.
Last week, President Trump also complained that the Fed only “sits, and sits, and sits” after the European Central Bank (ECB) lowered its main deposit rate by 10 basis points to a record low of -0.5%, as well as announced in a new round of bond-buying program to stimulate the euro zone economy.
The Fed lowered the benchmark interest rate by 25 basis points in July for the first time since 2008.