President Donald Trump touted stock market gains in a speech on Tuesday and resumed his public bashing of the Federal Reserve, arguing that stocks would have been 25% higher if it had not raised rates in 2018.
In a speech to the Economic Club of New York, Trump pointed to gains in the S&P 500, the Dow Jones Industrial Average, and the Nasdaq as a sign of the “economic boom among the likes of which we have never seen before.” Since Trump’s election in November 2016, S&P 500 and the Dow Jones have been up over 40% and the Nasdaq has risen almost 60%.
“If we had a Federal Reserve that worked with us, you could have added another 25% to each of those numbers I guarantee you that,” Trump said. “That doesn’t happen. But we all make mistakes, don’t we. Not too often, we do make them on occasion.”
Trump has taken issue with the Fed’s decision to raise rates eight times since he was elected. Four of those increases were done by Jerome Powell, the Fed Chairman that Trump himself tapped for the seat. Trump has called Powell and his Fed colleagues “boneheads,” among other names.
This year, the Powell-led Fed has since cut interest rates in three consecutive meetings amid trade concerns and geopolitical tensions abroad. The current interest rate target is now between 1.50% and 1.75%. Trump said the Fed’s actions were “far too fast an increase and far too slow a decrease.”
Powell has reiterated in the past that the Fed is independent from the executive branch and has said political considerations do not factor into the central bank’s decisions on monetary policy.
“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,” Powell said in June.
‘Give me some of that’
Trump also said he would like the Fed to bring negative interest rates to the United States, arguing that higher interest rates compared to the rest of the world puts the U.S. at a “competitive disadvantage.”
Trump pointed to monetary policies abroad that are paying banks not to hold money at the central bank, adding that “many are now getting paid when they pay off their loan.” Countries with negative interest rate policies have seen negative yielding government bonds, but not all consumer and commercial loans are negative.
Still, Trump said he would like the Fed to push rates into the negative.
“Give me some of that, give me some of that money, I want some of that money,” Trump told the Economic Club of New York. “Our Federal Reserve doesn’t let us do it.”
Powell said in September that the Fed is not considering negative interest rates, adding that if the Fed needed to counter adverse economic conditions he would favor large-scale asset repurchases like quantitative easing.
“I do not think we’d be looking at using negative rates. I just don’t think those will be at the top of our list,” Powell said September 18.
The Federal Open Market Committee’s final policy-setting meeting of 2019 will take place December 10 and 11.
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.