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11 Sep, 2019 15:27

US Fed ‘boneheads’ should cut interest rates to zero or less – Trump

US Fed ‘boneheads’ should cut interest rates to zero or less – Trump

US President Donald Trump has urged the Federal Reserve to slash interest rates to zero or less, saying that negative rates could save the government money on its debt.

The USA should always be paying the… lowest rate. No Inflation!

“The Federal Reserve should get our interest rates down to zero, or less, and we should then start to refinance our debt. Interest cost could be brought way down, while at the same time substantially lengthening the term,” Trump tweeted on Wednesday. He then praised the US dollar, calling it “the great currency.

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Trump again lashed out at the Federal Reserve’s chairman, Jay Powell, who’s been his constant whipping boy and has been blamed repeatedly for problems in the US economy.

It is only the naïveté of Jerome Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing,” Trump tweeted, while adding a final insult to the Fed, “a once in a lifetime opportunity that we are missing because of “boneheads.

Trump has repeatedly noted that rates are negative in Germany, Europe’s major economy, and called on the Fed to follow suit on more than one occasion. However, earlier he spoke of merely lowering rates, indicating that he does not want them to go into negative territory.

Prior to that, the US president said he believed he had the authority to fire Powell, despite the fact that the Fed is formally a separate entity from the government, and that Powell’s term as chairman don’t expire until 2022.

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Following Trump’s calls, the Fed cut rates for the first time in more than a decade in July. However, Trump has since accused both Powell and the Fed of “letting the market down” by refusing to announce a new “lengthy and aggressive” rate-cutting policy.

Financial markets expect yet another cut next week, according to Reuters. The current benchmark rate is 2.00-2.25%.

Cutting interest rates to zero and below is a move used by central banks to boost economic growth, but it can result in cutting savers’ and banks’ earnings. Trump’s critics have been saying his desire for lower interest rates may be tied to his personal pursuits. For instance, the Washington Post reported last month that, as a real estate developer, Trump could save millions of dollars in interest every year on outstanding loans on his hotels and resorts if the Fed brought rates down.

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