(Bloomberg) -- President Donald Trump said the U.S. should have Mario Draghi, president of the European Central Bank, at the helm of its monetary policy -- “instead of our Fed person” -- and reiterated that he has the right to demote or fire Federal Reserve Chairman Jerome Powell.
Trump made the comment Wednesday in an interview on Fox Business Network.
Trump has criticized the Fed for making credit more costly last year and for failing to lower interest rates last week. Policy makers “blew it” on June 19 when they kept the benchmark overnight rate unchanged, Trump tweeted on Monday. He compared the Fed to a “stubborn child.” He’s also recently denied that he threatened to demote Powell but says he has the authority to do so.
Earlier this month, Trump attacked Draghi in a tweet, after the ECB chief signaled more monetary stimulus may be on the way for the euro area. Trump tweeted that such a move would make it “unfairly easier for them to compete against the USA. They have been getting away with this for years, along with China and others.”
On Tuesday, at an event at the Council on Foreign Relations in New York, Powell highlighted the importance of the central bank’s autonomy from political interference -- even though he didn’t mention Trump by name.
“The Fed is insulated from short-term political pressures — what is often referred to as our independence,” Powell said. “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.”
Also on Tuesday, Powell reiterated that downside risks to the U.S. economy have increased recently, reinforcing the case among policy makers for somewhat lower interest rates.
A consensus is building that Powell and his colleagues will cut interest rates in coming months, as trade disputes hurt the outlook for the world economy. Last week, at its policy meeting, the Fed decided to leave rates unchanged but opened the door to a cut.
