U.S. President Donald Trump speaks during a roundtable discussion with conservative black supporters in the Cabinet Room at the White House in Washington, U.S., June 10, 2020.
Kevin Lemarque | Reuters
President Donald Trump has launched his first attack against the Federal Reserve in months, taking issue with the central bank’s subdued economic forecast.
“The Federal Reserve is wrong so often,” Trump said in a Thursday morning tweet.
The tweet came following a Fed meeting Wednesday in which officials released what markets interpreted as a grim near-term forecast for the recovery. Federal Open Market Committee members’ median outlook saw a 6.5% GDP decline for 2020 and zero interest rates for at least the next two years as the economy struggles with a recession brought on by the coronavirus pandemic.
But the forecast also indicated gains of 5% and 3.5% in the subsequent years, which actually jibes with Trump’s assertion of “one of our best ever years” ahead. If the 2021 outlook is correct, it indeed would be the best year for the U.S. since 1984.
Thursday’s tweet marks a departure for a president who recently has laid off the Fed following months of blistering attacks. Trump had complained that the Fed was keeping interest rates too high and not doing enough to help the economy continue what was the longest expansion in U.S. history.
While the central bank had resisted cutting rates as aggressively as Trump wanted previously, the coronavirus pandemic changed that.
Since mid-March, the Fed has slashed its short-term interest rate benchmark to near zero, began aggressively buying bonds again and instituted a series of programs aimed at keeping the markets and economy running.
The Wednesday Fed release showed near-unanimous anticipation that the funds rate would stay near zero as long as the economy is struggling, which would comply with Trump’s preference for lower rates.
“I think what you see is a very weak second quarter, historically weak, and an expansion that builds momentum over time,” Fed Chairman Jerome Powell said. He added that, “We’re not even thinking about thinking about raising rates.”