Trump lashes out at the Fed ahead of expected rate hike that could reportedly cost him an extra $1 million a year
The Federal Reserve is expected to increase its benchmark interest rate this week.
President Donald Trump criticized the central bank once again on Monday for considering another interest-rate hike.
The president has variable-rate loans linked to the federal funds rate.
President Donald Trump lashed out at the Federal Reserve on Monday, which is expected to increase borrowing costs this week in a move that could add nearly $1 million to his debt-service costs per year.
“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike,” he wrote on Twitter. “Take the Victory!”
The Fed is expected to increase its benchmark interest rate by a quarter percentage point at a policy meeting Wednesday, which would raise borrowing costs for Americans.
Trump has about $340 million worth of variable-rate loans linked to the federal funds rate, Bloomberg reported last month. Since his January 2017 inauguration, hikes may have added a cumulative $5.1 million per year to his debt service costs. With Wednesday’s expected hike factored in, that could increase to about $6 million.
While presidents generally avoid commenting on monetary policy out of respect for the independence of a central bank, Trump has repeatedly blamed Federal Reserve Chairman Jerome Powell for trouble on Wall Street this year. There is a consensus among economists and bipartisan lawmakers, however, that increasing the cost of borrowing can be necessary at times to avoid high levels of inflation.
Officials have hiked three times this year and eight times since 2015, most recently in September. Market watchers have been closely monitoring for signs of whether recent turbulence in equity markets or ongoing trade tensions could influence the Federal Reserve’s rate path.
“It’s sort of a catch 22 for the Fed,” said Neil Dutta, head of economics at Renaissance Macro Research.
“I think Trump makes very good points, to be honest. But if they skip a hike are they caving to Trump? If they do hike are they ignoring the data? Which of those looks worse for the Fed? I’d argue ignoring the data.”