The Federal Reserve cut its key interest rate for the first time in over a decade in a move intended to “counter the impact of President Donald Trump’s trade wars,” The Associated Press reported.
The Fed lowered its benchmark rate by 0.25%, marking the first time the Fed has cut rates since the Great Recession.
“Weak global growth and trade tensions are having an effect on the U.S. economy,” Federal Reserve Chairman Jerome Powell said, adding that lagging manufacturing and lower inflation also prompted the “insurance of a rate cut now.”
“It’s not the beginning of a long series of rate cuts,” he said. “I didn’t say it’s just one or anything like that. When you think about rate-cutting cycles, they go on for a long time, and the committee is not seeing that — not seeing us in that place. You would do that if you saw real economic weakness.”
Trump lashes out at Powell:
Trump, who has repeatedly called for the Fed to slash interest rates, lashed out at Powell for not going far enough.
“What the market wanted to hear from Jay Powell and the Federal Reserve was that this was the beginning of a lengthy and aggressive rate-cutting cycle which would keep pace with China, the European Union and other countries around the world,” Trump tweeted. “As usual, Powell let us down.”
“We are winning any way, but I am certainly not getting much help from the Federal Reserve!” he added.
Ex-economic adviser says Trump trade war failing:
Gary Cohn, Trump’s former top economic adviser, told BBC Radio 4’s “Today” show that Trump’s trade war with China had backfired.
“I don’t really think it’s hitting the Chinese economy,” Cohn said. Instead, he explained, the retaliatory tariffs from China had a “dramatic impact” on US manufacturing and job creation.
“We are an 80% service economy,” he said. “The service side of the economy is doing very well because, guess what, it’s not being tariffed.”
“When you build plant equipment, you’re buying steel, you’re buying aluminium, you’re buying imported products and then we put tariffs on those, so literally the tax incentive we gave you with one hand was taken away with the other hand,” said Cohn.