An angry President Donald Trump on Thursday blasted Federal Reserve Chairman Jerome Powell for not cutting interest rates enough just a day after they were shaved. The president — who has referred to himself as the “king of debt” — personally benefits from every reduction in interest on hundreds of millions of dollars he has borrowed for his businesses.
The Federal Reserve cut its benchmark interest rate Wednesday an additional quarter point to a range of 1.5% to 1.75%. It was the third cut this year. Such cuts are traditionally considered emergency actions when the economy is struggling.
Trump claimed Thursday in a tweet that “people are VERY disappointed” in Powell for not cutting interest rates enough. He also blamed Powell — who was chosen by Trump — for economic problems economists widely attribute to Trump’s own trade war with China.
Powell indicated at a news conference Wednesday that rates won’t likely be cut again this year — despite relentless pressure from Trump — unless the economic outlook worsens.
Trump stands to save an estimated millions of dollars in interest annually when the Fed cuts rates. In the five years before he became president, Trump borrowed more than $360 million from Deutsche Bank for his hotels in Washington and Chicago, and his Doral golf resort, The Washington Post has reported. All of the loans have variable interest rates, according to his financial filings, which means he reaps benefits each time the Fed lowers interest rates.
Shortly before Trump became president, he railed against low interest rates that he said created a propped-up “false economy.” He said rates were “artificially low so the economy doesn’t go down,” so that President Obama could “go out, play golf after January and say he did a good job.” Trump complained that those who saved money were getting “absolutely creamed” because they were earning less on interest.
Last month, Trump said the “boneheads” at the Federal Reserve should cut interest rates to zero — or even to negative rates. Cutting rates to zero would save Trump an estimated $8 million a year.
Lower rates are intended to encourage more borrowing and spending to stimulate the economy. The biggest beneficiaries are major borrowers — like Trump — as it becomes increasingly cheaper to borrow money. It also generally benefits consumers seeking car loans and mortgages as interest rates dip (though mortgage rates are up now). But it penalizes savers and those who can’t afford to invest because it reduces interest income from bank savings accounts or from more affordable financial vehicles like Treasury notes. It also hits those on fixed incomes hard.
Critics on Twitter weren’t buying Trump’s attack on Powell — or the president’s expertise on the economy.