President Trump said on Friday in a social media article that the Federal Reserve Board should “assume control” while two Fed governors explained why they broke out with President Jerome Powell on the rates.
The president urged the Fed board of directors, which chairs Powell, to “do what everyone knows how to do” if Powell does not support the interest rates below.
His comments came just before the Fed governors, Christopher Waller and Michelle Bowman, explained in new statements why they disagreed with Powell on Wednesday and pleaded for a reduction in the quarter -quarter level at the last Fed meeting.
Waller and Bowman have cited worries about the labor market as a reason to start cutting again.
“I believe that the waiting and waiting approach is too cautious and, in my opinion, does not correctly balance the risks to the prospects and could lead to politics behind the curve,” Waller said in his declaration.
Bowman added in his declaration that the “labor market has become less dynamic and shows growing signs of fragility”.
It was the first time that two governors of the Fed have dissident in a monetary policy decision since 1993.
The declarations of Waller and Bowman intervened 30 minutes before the July employment report published on Friday morning, which showed that the American economy added fewer jobs than expected last month.
Merchants increased their chances of a drop in rate at the 80% Fed meeting after the publication of this lower than expected work reading, after lowering them below 40% on Thursday.
The governors of the Federal Reserve Christopher Waller and Michelle Bowman. (AP photo / file) ·Associated Press
Trump seemed to praise the governors of the Fed after the publication of their statements, adding a social article of separate truth: “Strong disants on Fed Board. He will only become stronger!”
Trump’s attempts to influence the Fed board of directors mark another escalation in his campaign to put pressure on Powell. The president said in an article on Thursday that Powell is “too angry, too stupid and too political” to have his work.
Powell at a press conference on Wednesday did not move from his point of view according to which more time is necessary to assess the impact of Trump’s prices on inflation and the economy, saying that there is still “a long way to go” to understand this and “you must consider this as still quite early”.
He also refused to say if a reduction was on the table for the next Fed meeting in September and clearly indicated that inflation was still a concern because the Fed balances his double mandate of stable prices and maximum employment.
“In the end, there is no doubt that we will do what we have to do to keep inflation under control.”
A new reading on inflation published Thursday has shown accelerated price increases in June more than expected, because inflation has remained greater than the 2% target of the Fed.
This new reading “will not do much to alleviate the concerns of the Fed concerning inflation focused on prices,” said deputy economist of the capital economy, Harry Chambers, in a note on Thursday. “If these pressures persist, as we expect, a September cup seems unlikely.”
But Waller argued in his declaration on Friday that “the effects of prices of the prices have been weak so far, and as we will probably not have clarity on the rate levels or their ultimate impact on the economy in the coming months, it is possible that the labor market vacillates before this clarity is obtained – if it is obtained.”
“When the labor markets run, they often turn quickly.”
President Donald Trump speaks with the president of the federal reserve Jerome Powell while visiting the federal reserve in Washington, DC, on July 24. (Photo of Andrew Caballero-Reynolds / AFP via Getty Images) ·Andrew Caballero-Reynolds via Getty Images
In his declaration, Bowman also pointed out that the sustainable inflationary impacts of prices are probably overestimated and have warned that the labor market could become south faster than current forecasts.
Bowman warned that economic growth has slowed down more than some head data suggests, saying that “the underlying economic growth has slowed considerably”. More specifically, Bowman has cited a slowdown in private interior end purchases – expenses mainly in goods and services by American companies.
Wednesday morning GDP data showed that spending had increased at an annualized rate of only 1.4% in the second quarter, the slowest since 2022. GDP in the lead, on the other hand, has shown that the economy has extended to a rate of 3% in the second quarter.
“If the demand conditions do not improve, companies may have few options other than starting to fire workers, recognizing that it may not be as difficult to rehire given the change under labor market conditions,” added Bowman.
Trump said on Wednesday that he was in fact expecting a reduction at the next Fed meeting, telling journalists that “I hear that they will do it in September”.
The Fed’s decision to keep the rates pending this week is expected to increase tensions with Trump, which has also invoked in recent weeks a renovation of $ 2.5 billion from the Fed headquarters as a means of questioning the management of the institution’s Powell.
Trump had attenuated his criticisms of the president of the week preceding the Wednesday meeting. During a visit to the construction project last week, he said about Light Powell: “Doing this is a big decision, and I don’t think it’s necessary.”
Asked last Thursday what could lead him to back off from the criticism dam that Trump has leveled against Powell for weeks, the president said: “I would love him to lower interest rates”, before typing Powell on the back.
But following the decision to maintain the rates pending for the fifth consecutive meeting, Trump gave a more severe view of the Fed chair in his posts.
“Jérôme” Too late “Powell, an obstinate cretin, must now considerably reduce interest rates,” he said in one of the three articles on the Fed theme on Friday.
“If he continues to refuse, the board of directors should assume control and do what everyone knows to do!”
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