Hours after excoriating the Federal Reserve and its chief, Jerome Powell, for having “no guts,” President Donald Trump told reporters his handpicked chairman’s job is safe, although he added, “I don’t think he knows how to play the game very well.”

The comments came after the central bank made a modest cut in interest rates on Wednesday, continuing to buck Trump’s push for more aggressive action. Within a half-hour of the announcement, Trump was on Twitter. “Jay Powell and the Federal Reserve Fail Again,” he tweeted. “No guts, no sense, no vision! A terrible communicator.”

Jerome Powell

Federal Reserve Board Chair Jerome Powell speaks at a news conference following a two-day meeting of the Federal Open Market Committee, Wednesday, Sept. 18, 2019, in Washington. AP Photo/Patrick Semansky

Trump and Powell have been locked in a standoff for months over what kind of stimulus, if any, is needed to shield the U.S. economy from the forces that are eating into global growth. The Organization for Economic Cooperation and Development reported Thursday that the U.S.-China trade war had dragged growth to its lowest level since the financial crisis.

The law does give Trump the authority to fire Powell “for cause,” but the courts do not generally consider policy differences as “cause.” For his part, Powell said he intends to serve the entirety of his four-year term, and that he’d refuse to leave his post even if Trump demanded it.

Last week, Trump derided Powell and other Fed leaders as “Boneheads” for not slashing rates to zero or even into negative territory as the European Central Bank has done for the past five years – a controversial move that is without precedent in the U.S. Trump maintains that Europe is using negative rates to gain an unfair advantage over the U.S., but experts are stymied as to why the president is calling for emergency monetary policy measures during a time of relative economic strength.

“Look, we have a great economy, and that’s not going to make the difference,” Trump told reporters at the border on Wednesday, expressing his frustration that the rate cut wasn’t bigger. “But it would have given us an edge, and instead, somebody else has an edge, but they’re so far behind us they can’t catch us.”


When asked whether Powell’s job was safe, Trump responded with a surprising ambivalence.

“Yeah, it’s safe,” Trump answered. “I mean, sure. Why not?”

When a reporter said Trump had paused before answering, Trump denied it. Then he reiterated his disappointment in Powell.

The Fed’s rate cut was only the second since the Great Recession, but it did little to excite markets, which barely reacted to the news. The Fed trimmed its benchmark interest rate by a quarter-percentage point despite dissent from three officials, two of whom deemed the cut unnecessary and one who said a greater cut was needed. And in remarks after the meeting, Powell was noncommittal about future cuts.

“There will come a time, I suspect, when we think we’ve done enough. But there may also come a time when the economy worsens and we would then have to cut more aggressively,” Powell told reporters Wednesday. “We don’t know.”

Powell declined to respond to Trump’s attacks but emphasized the importance of an independent Fed, adding that the central bank “will continue to conduct monetary policy without regard to political considerations.”


But conducting policy with a steady hand is challenging even without the president’s attacks, as recession warnings surface in the U.S. economy and other central banks around the world cite the need for stimulus to abate a global slowdown.

On Thursday, the Organization for Economic Cooperation and Development said the trade war had dragged global growth from 3.6 percent in 2018 to 2.9 percent this year; that’s the lowest level since the 2008-09 financial crisis. The year-long conflict between the United States and China has obliterated trade growth, which had boosted the global economy after the crisis, and significantly dampened business confidence, the OECD reported.

“What looked like temporary trade tensions are turning into a long-lasting new state of trade relationships,” OECD chief economist Laurence Boone told Reuters. “The global order that regulated trade is gone and we are in a new era of less certain, more bilateral and sometimes assertive trade relations,” she added.

The OECD also cut its expectations for U.S. growth for this year and 2020, citing the trade war’s toll on manufacturing and farming. The U.S. manufacturing sector, which is seen as a barometer of economic health, contracted in August for the first time since 2016.

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