Trump blames Fed for economy not reaching 4 percent GDP in 2018

Trump blames Fed for economy not reaching 4 percent GDP in 2018

Fed Chairman Jerome Powell today during his testimony before the Senate Federal Reserve Board's semiannual report to Congress 2018, (Photo ©2018 Doug Christian/TMN)
After Fed Chairman Jerome Powell gave a speech Friday morning, President Donald Trump attacked him on Twitter. (File photo ©2018 Doug Christian/TMN)

WASHINGTON – The U.S. economy would have grown at a faster rate in 2018 had the Fed not voted to raise interest rates, President Donald Trump said in an interview that aired Friday morning.

“Frankly, if we didn’t have somebody (Federal Reserve Chairman Jerome Powell) who would raise interest rates and do quantitative tightening, we would have been at over 4 (percent GDP growth) instead of a 3.1,” Trump told Fox Business’s Maria Bartiromo.

However, Trump touted last year’s economic numbers in the interview and later in a tweet.

The Fed made four modest rate adjustments in 2018.

In December, the Fed said two rate hikes were possible in 2019 due to a projected slowdown in economic growth.

However, Chairman Powell told reporters Wednesday that he does not anticipate any rate hikes this year. His announcement came after the Federal Open Market Committee voted to sustain rates at 2.25-2.5 percent.

The Fed originally predicted the economy would grow at 2.3 percent this year but now predicts 2.1 percent growth.

The Fed has historically kept interest rates low when the economy is sluggish to encourage borrowing. The Fed has historically raised interest rates when the economy is strong so as to keep pace with inflation.

In the short term, the Fed’s announcement has done little to boost market confidence.

As of Friday 10:30 a.m. EDT, the Dow Jones Industrial Average had fallen more than 200 points from its opening. The NASDAQ and NYSE indexes also had fallen.

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