Despite President Donald Trump’s ongoing pressure, the U.S. Federal Reserve left rates unchanged on Wednesday. The central bank did refrain from using the word “patient” in their release, signaling it could cut rates in the near future if needed. However, Federal Reserve Chairman Jerome Powell has made a clear stance that the Fed will not make rate decisions based on trade policy.
“The president keeps putting pressure and blame on the Fed for any kind of slowdown on the economy. [Trump] really should let Jay Powell do his job and he should do his job,” Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corporation, told Yahoo Finance, adding that Trump “should negotiate and finalize the trade agreement. It’s hurting our economy, it’s hurting his re-election prospects next year.”
Bair explained that the ongoing trade dispute with China is a key problem for the economy, and a resolution should be a top priority for Trump. “If we did get a trade deal with China, it would be hugely beneficial to our economy and the stock market, in a way that’s really contributing to economic growth, not through monetary policy.”
Earlier this week, Trump confirmed a meeting with Chinese President Xi Jinping at the upcoming G20 summit later this month, indicating possible development in a trade war resolution.
Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.— Donald J. Trump (@realDonaldTrump) June 18, 2019
Bair, who traveled to China last week and spoke to government officials and people in the finance industry, said that there is “an erroneous” perception overseas that the U.S. Federal Reserve makes interest rate decisions based on trade policy. Bair told Yahoo Finance, “that is the impression that is created when the president bashes the Fed. The Fed is just trying to do what is right for the economy.”
All in all, Bair is unsure that a resolution can be made. “Can he actually negotiate a deal? We see a lot of posturing, a lot of chest beating, a lot of putting peoples’ back to the wall, but where’s the agreement? That’s what we need.”
Taylor Locke is a Producer for Yahoo Finance On the Move. You can follow her on Twitter @itstaylorlocke.