Aug 19, 2019

Trump calls on Fed to cut rates by "at least 100 basis points"

President Trump on Monday tweeted that the Federal Reserve should cut interest rates by "at least 100 basis points, with perhaps some quantitative easing as well," in order to boost the U.S. and world economy.

"Our Economy is very strong, despite the horrendous lack of vision by Jay Powell and the Fed, but the Democrats are trying to 'will' the Economy to be bad for purposes of the 2020 Election. Very Selfish! Our dollar is so strong that it is sadly hurting other parts of the world. The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!"

Why it matters: Trump's attempted politicization of the Fed is not new, but he's never called for a rate cut as drastic and specific as this one. Major quantitative easing and a full percentage point cut in interest rates (from 2.25% to 1.25%) are tools that the Fed normally uses to stimulate the economy in a recession. The inversion of the yield curve, a warning sign that has preceded every recession for the past 70 years, caused a major sell-off in the stock market last week and has White House officials scrambling to do damage control.

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