His comments – during an exclusive interview with ABC News Chief Anchor George Stephanopoulos – were among his strongest yet aimed at the politically independent Federal Reserve. They add weight to concerns that the president could try to oust the head of the Federal Reserve, even if he isn’t successful. Powell declined to comment. He has said previously that he wouldn’t resign if asked by Trump.
Speaking with ABC News Chief Anchor George Stephanopoulos in Council Bluffs, Iowa, on Tuesday, Trump said that the market would be stronger "if we had a different person in the Federal Reserve who wouldn’t have raised interest rates so much . . . ”
Trump’s repeated public criticism of the Federal Reserve potentially puts the chairman in an uncomfortable position. If Powell eventually does what Trump wants -- even if he makes that decision independently without factoring in the president’s opinion – the board could be perceived as biased or politically tainted.
At one point in the exchange, Stephanopoulos asks Trump whether he has concerns that his repeated commentary on the Federal Reserve puts Powell “in a box.”
“Yes, I do,” Trump responded. “But I’m gonna do it anyway because I’ve waited long enough.”
The Federal Reserve – which can raise or lower interest rates to slow down or stimulate the economy with concerns of inflation in mind – was created so as to operate independently of any political influence.
While the president can appoint its chair and fill open seats on the board with governors serving 14-year terms, the Federal Reserve doesn’t need approval from the White House or Congress to raise or lower rates. Even its budget remains independent, with operations paid for through fees and income generated from the securities it owns.
Firing a Federal Reserve chairman or governor for “cause” is feasible but also virtually unheard of. The last time a Federal Reserve chair clashed so starkly with a president was under President Lyndon B. Johnson, though the chairman at the time, William McChesney Martin, didn't resign.
In his interview, Trump said he was “allowed” to criticize Powell and claimed it was commonplace in the “old days” for a president to "settle" with the bank’s chairman.
“You know, in the old days, they used to speak to the head of the Federal Reserve often,” Trump said.
“And it was … very much a part of the administration from the standpoint as they’d talk and they’d really settle,” he said. “You have no idea how important it is.”
Trump said he thinks the market could be 10,000 points higher if the Federal Reserve hadn’t hiked rates last year.
At one point, Stephanopoulos notes that Powell wouldn’t be in the job if it weren’t for him.
“He’s my pick,” Trump acknowledged. “And I disagree with him entirely.” __ABC's Matthew Vann contributed to this report.
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Below is a complete, unedited transcript of that portion of the president’s exclusive interview with ABC News from Council Bluffs, Iowa.
President Trump: We have great numbers. The companies are very strong. They've very liquid. Frankly, if we had a different person in the Federal Reserve that wouldn't have raised interest rates so much, we would have been at least a point and a half higher. I mean –
Stephanopoulos: He's your pick.
President TrumpP: 3.2 is good – He's my pick. I agree. But, you know, we also have people in there that weren't my pick. But he's my pick. And I disagree with him entirely. As you know, it's independent.
Stephanopoulos: I was going to ask you about that. What do you make of the critics who say it's just inappropriate for you to be talking about the Fed chairman –
President Trump: Well, I'm allowed to. And, you know, in the old days, they used to speak to the head of the Federal Reserve often. And it was a part, very much a part of the administration from the standpoint as they'd talk and they'd really settle. You have no idea how important it is. But I'm not happy with what he's done. I'm not happy with the fact that they've done quantitative tightening. Now, he doesn't make that decision himself. But, I would think that the head of the Federal Reserve has quite a bit of power. No, I'm not happy. Now, if – if we –
Stephanopoulos: Do you have any concern you're putting him in a box—
President Trump: Let – let me explain. Yes, I do. But I'm gonna do it anyway because, I've waited long enough. If he did the interest rate increases half as much, if he didn't do tightening – tightening means taking money out of the, out of the till, so that people can't use it for doing what they're doing. We call it quantitative tightening. If he didn't do tightening, if he did nothing or perhaps even loosened, we would be in my opinion, just an opinion, 10,000 points higher than already a very high number. You know, we're – from the time I got elected, we're about, we're almost 50% up with the stock market. But if he didn't do the tightening and if he didn't do so much of an in – it's okay to raise interest rates a little bit. But so much, it would have been – it would have been even better.
Stephanopoulos: But you're not worried –
President Trump: And I'll – and I'll tell you something, what I don't like is when you raise the interest rates, there's no inflation, there's virtually no inflation. When you raise interest rates that means you're paying more in debt. And I inherited almost $21 trillion in debt. I inherited that. President Obama and Biden, they doubled the debt during their eight years. You know that. And —
Stephanopoulos: It's been going up on –
President Trump: I inherited –
Stephanopoulos: On your watch, too –
President Trump: Sure. But I have to rebuild the military. They doubled the debt, and they didn't do anything. They doubled the debt on nonsense. I took over a military that was totally depleted. I have to rebuild it. . .