Donald Trump and his powerful allies were quick to pounce on Thursday’s better-than-expected inflation report, slamming the Biden/Harris administration, the Federal Reserve and central bank Chairman Jerome Powell.
Former President Donald Trump appeared at the Detroit Economic Club on Thursday afternoon and said, “The fact is that the Federal Reserve cut interest rates a little too quickly.”
“It’s such a huge cut and we all know this was a political ploy to do before the election,” he added.
This is Mr. Trump’s most direct criticism of Mr. Powell in recent months and follows the Republican candidate’s initial reaction to the 50 basis point interest rate cut in September, in which Mr. Trump directly criticized the central bank. They often focused on blaming the economic downturn rather than on the economic downturn. .
“This is completely a political decision, and inflation is starting to rise,” President Trump said Thursday, adding that high interest rates are “really crushing the American Dream for young people.”
Republican presidential candidate and former U.S. President Donald Trump speaks at the Detroit Economic Club on October 10. (Bill Priano/Getty Images) (Bill Priano via Getty Images)
President Trump’s Make America Great Again, a super PAC backer, also joined in Thursday’s release, saying Thursday’s inflation numbers could be part of “the Fed’s worst nightmare.”
Overall, prices as measured by the Consumer Price Index rose 2.4% over last year, marking a slight deceleration following August’s 2.5% annual price increase.
However, the decline in annual statistics was largely overshadowed by a 0.2% month-on-month rise in September, which exceeded economists’ expectations for a 0.1% rise.
Democrats, including the Biden-Harris administration, have decided to focus on the annual numbers, with National Economic Advisor Lael Brainard saying in a statement that “inflation has fallen to 2.4%, the same as it was just before the pandemic.” did.
“We continue to make progress,” she added.
Political headache for Powell
The Fed’s Open Market Committee will not meet again until after Election Day. Thursday’s inflation data appeared to provide fresh momentum for central bank hawks, who signaled a more gradual pace of rate cuts in coming months.
And some initial reaction was that no matter what President Trump says, a change in strategy is unlikely.
Max Kettner, chief multi-asset strategist at HSBC, said in an appearance on Yahoo Finance Live on Thursday that it was “pretty much certain” that rates would be cut by 25 basis points in the final two meetings of the year. said.
However, Atlanta Fed President Rafael Bostic told the Wall Street Journal on Thursday after the CPI release that he had “absolutely no objection” to keeping rates on hold next month, and has already given estimates for one more rate cut this year. He said he was writing.
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Thursday’s commentary on the campaign marks a return to political headaches for Mr. Powell, who has waxed and waned throughout 2024.
Then-President Donald Trump will exit with Federal Reserve Board member Jerome Powell at the 2017 White House to announce him as the candidate for the next Federal Reserve Chairman. (Javin Botsford/The Washington Post via Getty Images)(The Washington Post via Getty Images)
President Trump said in August that he wanted a “say” in setting interest rates, raising expectations that a Republican victory in November could reduce the Fed’s independence.
He was even more blunt earlier this year, when he told Bloomberg in June that layoffs were “something they know they shouldn’t do.” This came after President Trump said in a February interview with Fox Business that “I think (Powell) will probably do something to help the Democrats” regarding the cuts.
But when the decision was finally made to cut rates, President Trump’s first reaction was to focus on the economy.
“Assuming they’re not just playing politics, I think a rate cut like this is a sign that the economy is in a very bad place,” President Trump said in September, hours after the rate cut. Ta.
“This was a political move,” he said in a Newsmax interview days later, prompted by the interview and after Trump mentioned the economy for the first time.
Ben Werschkul is Yahoo Finance’s Washington correspondent.
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