President Donald Trump stepped up his criticism of the U.S. Federal Reserve Friday, insisting along with his top economic adviser that the central bank cut interest rates just hours after March employment data showed little upward pressure on wages and stronger-than-expected job creation.
Speaking to reporters in Washington as he prepared for at two-day visit to the Mexican border, Trump said the Fed show lower interest rates from its current range of 2.25% to 2.50%. Around the same time, White House Economic Adviser Larry Kudlow told Fox News that Trump thinks the Fed went "too far" in its past hiking cycle, which saw benchmark rates lifted on eight separate occasions, and said the central bank could use "new thinking" on how supply side dynamics influence the broader economy.
"Our country is doing unbelievably well, economically," Trump told reporters before boarding Marine One. "We have a lot of very exciting things going on, at lot of companies will be announcing shortly that they'll be moving back to the United States. They want to be where the action is."
"I personally think the Fed should drop rates, they've really slowed us down," he said. "There's no inflation. In terms of quantitative tightening, it should be quantitative easing", referencing the Fed's option of either selling government bonds from its $4 trillion balance sheet or purchasing government bonds from the $19 trillion or so that are currently outstanding in fixed income markets.
"I think they should drop rates and get rid of quantitative tightening," Trump said. "I think you'd see a rocket ship."
The Atlanta Fed's GDPNow forecasting tool, a real-time tracker of U.S. economic performance, suggests a 2.1% growth rate for the first quarter, marginally slower than the 2.2% tally recorded over the final three months of last year.
The Fed's preferred inflation gauge, the so-called core PCE index, accelerated at a slower-than-expected 0.1% annual pace in January, the latest available data set owing to the 35-day government shutdown.
The direct criticism of the Fed comes as the President also looks to add two people to the central bank's Board of Governors, opting for economic commentator Stephen Moore and former Republican Presidential candidate Herman Cain.
It also comes just after the Bureau of Labor Statistics said that while U.S. employers added 196,000 new jobs last month, topping the Street consensus forecast of 180,000, average hourly wages only rose by 0.1% from the previous month.
"All in all, the March jobs report was strong enough to convince investors that the economy and corporate profits will continue to power ahead all while wage gains slightly below expectations, helping to keep inflation worries at bay without undermining confidence in the consumer," said FTSE Russell's global markets research director Alec Young.