Gold prices edge higher on raised Fed rate cut hopes
Investing.com -- U.S. President Donald Trump once again called for an immediate interest rate reduction in a Truth Social post on Tuesday, while offering more criticism of the Federal Reserve Chair Jerome Powell.
Trump referred to Powell as "Too Late" in his social media statement, claiming the Fed chair has caused "incalculable" damage by being consistently behind the curve on monetary policy decisions.
The president also mentioned that he was "considering allowing a major lawsuit against Powell to proceed" related to what he described as mismanagement of Federal Reserve building construction projects.
In his post, Trump alleged that $3 billion was spent on Federal Reserve building work that should have cost only $50 million for renovations.
Trump also criticized former Treasury Secretary Steven Mnuchin, whom he referred to as "Steve Manouychin," suggesting Mnuchin had recommended Powell for the position.
Despite his criticism of the Federal Reserve leadership, Trump claimed the economy is performing well enough to have "blown through Powell and the complacent Board."
Weighing on the matter, TD Cowen’s Jaret Seiberg said Trump’s threat to sue Powell over the Federal Reserve headquarters renovations is unlikely to influence Powell’s approach to monetary policy and may even harden his resistance to cutting rates, as doing so could appear to bow to political pressure.
Seiberg added that the situation politically benefits Trump, allowing him to blame Powell for any economic weakness while still benefiting from the Fed’s focus on lowering inflation, which is why removing Powell would carry more downside for the president. Meanwhile, he sees Trump’s nomination of Council of Economic Advisers Chair Stephen Miran to the Fed as routine, with little risk of politicizing monetary policy; Miran’s views on expanding voting rights to all Fed Bank presidents could foster broader debate, but as one vote among many, he is unlikely to shift the FOMC’s core focus on price stability and maximum employment.
(Frank DeMatteo contributed to this article)