During a brief Q&A with reporters on Tuesday, Donald Trump complained a bit about the Federal Reserve raising interesting rates. Asked if he’d communicated his concerns to Fed Chair Jerome Powell, the president replied, “No, I like to stay uninvolved with them.”
Of course, staying “uninvolved” doesn’t mean Trump won’t whine incessantly.
President Trump put the Federal Reserve at the middle of Wednesday’s stock-market selloff just minutes after the White House issued a statement playing down the drop by pointing to solid economic fundamentals.
“The Fed is making a mistake,” Mr. Trump told reporters in Erie, Pa., after stock markets suffered their biggest decline in more than seven months. “I think the Fed has gone crazy…. I really disagree with what the Fed is doing, OK?”
As a substantive matter, the president’s argument isn’t ridiculous. Trump’s basic point is that the Federal Reserve shouldn’t raise interest rates without significant evidence of inflation, and by the standards of this White House, that’s a rather mainstream thing to say.
There are, however, a few problems with Trump’s increasingly over-the-top lobbying.
For one thing, one need not be obsessive about political norms to realize that it’s a bad idea for a sitting president to undermine public confidence in the Federal Reserve, especially one led by a chairman the president personally chose.
Indeed, presidents have traditionally avoided rhetoric like this for practical reasons: leaders don’t want to bait the Fed into raising rates as a demonstration of its independence.
For another, pretty much everything Trump is saying right now about interest rates is the opposite of what he said on the campaign trail two years ago. In fact, before he took office, Trump accused Janet Yellen, the then-chair of the Federal Reserve, of corruption for failing to raise rates under similar economic circumstances.
But even putting these angles aside, let’s not overlook the broader context: Wall Street saw a very sharp slide yesterday, and this president has treated the stock market as a day-to-day report card on his economic competence. The more the indexes go up, the more Trump sees it as proof of his own excellence.
Which makes down days politically awkward. Trump, however, made clear yesterday that in the event of economic tumult, he already has a blame-shifting excuse ready to go: the buck stops at the Fed, not in the Oval Office.