Former President Donald Trump suggested Wednesday that the Federal Reserve’s decision to cut interest rates by a half-point may be politically motivated.
Asked for his reaction to the rate cuts while campaigning in New York City, Trump said they reflected a “very bad economy” or that the Fed was playing “political games” with its rate setting.
“Assuming they’re not playing politics, I think cuts of this magnitude are an indication that the economy is very bad. Either the economy is very bad or they’re playing politics. But they were massive cuts,” Trump said.
While the timing of the rate cut may seem to help Vice President Kamala Harris’ bid for the White House by easing the economic burden Americans are currently shouldering just before the vote, central banks make decisions regardless of political calendars.
“We never use our tools to support or oppose a political party or a politician or any political outcome,” Fed Chairman Jerome Powell told reporters in July after the central bank decided to keep interest rates unchanged.
Even Kevin Hassett, who served as chairman of the Council of Economic Advisers under President Trump, said in an interview with PBS News last week that “there’s a lot of bad data out there, and a smart Fed would start lowering rates right now and managing risk.”
“It’s unfortunate that it’s happening before an election as a display of partisanship,” said Hassett, who has been cited as a possible pick for Fed chairman if Trump wins the election.
He had previously said it would be a “big mistake” for the Fed to cut interest rates before the election, but later said the worsening economic situation had changed his view.
