Trump Says he may “Regret” the Appointment of Fed Chairman. US President Donald Trump once again proceeds to Jerome Powell, the president of the American system of central banks.
According to reports, in an interview, he says that it looks like Powell is pleased to raise interest rates.
“Each time we do something exceptional, he increases the interest,” said the businessman.
When asked if he regrets Powell’s appointment, Trump states “maybe”, although he finds it too early to say so.
After years of boosting the American economy with low interest rates, the Federal Reserve is now building the stimulus policy.
This year the most crucial interest rate has already been raised three times, and it is likely that the end of 2018 will add an increase.
With this, Powell and the other Fed directors try to prevent the American economy from overheating.
But Trump views economic growth as the yardstick for his performance and refers to growth figures as “his figures”.
Also, he describes his quest for more growth as a match with his predecessor Barack Obama.
Independence central banks
According to economists, central banks need to operate independently from a government.
Otherwise, it is tempting for a government to stimulate the economy with low interest rates and try to win votes.
But in practice, this is sometimes challenging because the same government also appoints a central bank president.
Paul Volcker, chairman of the Federal Reserve in the 1980s,
recently told that he was secretly under much pressure from the then President Ronald Reagan.
Reagan asked him not to increase the level of interest before the American elections in 1984.
Richard Nixon, the United States President from 1969 to 1974,
would have put the central bank under pressure during his appointment.
He asked the Fed to keep interest rates low.