US President Donald Trump delivered a strong message about monetary policy and his position as chairman of the Federal Reserve System in a statement on the social media platform Truth Social.
President Trump has said that no one who does not share his views will be appointed as Fed chair, and he has called on the newly appointed Fed chair to support growth rather than hurt markets.
President Trump claimed that the economic data released that day was extremely strong, saying that the U.S. economy was doing better than expected. He noted that gross domestic product (GDP) increased by 4.2%, compared to market expectations of 2.5%, and claimed that this increase occurred “despite downward pressure from the recent government shutdown by Democrats.”
But Trump says modern market structures are no longer able to properly price such positive data. He said good news used to boost stock markets, but now inflation concerns are creating investor expectations for interest rate hikes, which is putting pressure on the market. President Trump argued that this approach would harm strong, healthy markets, saying, “Even strong, abnormal markets don’t cause inflation. The real problem is bad decisions and recklessness.”
The president emphasized that the new Fed chair should lower interest rates when markets are strong, saying, “I want a Fed that works well, not unnecessarily destroys markets.” President Trump argued that raising interest rates would stifle the economic recovery and hinder the U.S. economy’s chances of achieving another 10, 15, or even 20 percentage points of growth within a year.
Regarding inflation, President Trump has argued that price pressures will balance out naturally over time. He said rate hikes could be implemented at the right time if necessary, but stressed that the right time would not kill any market rebound. President Trump criticized the current approach, saying, “America should be rewarded for its successes, not dragged down by them.”
*This is not investment advice.
