U.S. Treasury Secretary Steven Mnuchin said Saturday that Donald Trump was not trying to put pressure on the Federal Reserve when he criticized its decision to raise interest rates.
Speaking to reporters on the sidelines of a Group of 20 meeting in Buenos Aires, Argentina, Mnuchin said he can’t comment on why the U.S. president made the comments but he doesn’t think they were a mistake.
Mnuchin said he’s talked to Trump and “his intention is not to in any way put pressure on the Fed,” referring to the U.S. central bank.
“I just want to assure you this was not intended to put pressure on the Fed or jeopardize the Fed’s independence,” he added.
On Friday morning, Trump for a second day criticized the Federal Reserve, breaking with a long-standing tradition at the White House of avoiding any influence, real or perceived, on the independence of the U.S. central bank.
In a tweet, he said: “China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day — taking away our big competitive edge.”
Trump added, referring to the Fed’s rate increases: “The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done.”
Last month, the Fed raised its benchmark rate for a second time this year and projected two more increases in 2018. Its rate hikes are meant to prevent the economy from overheating and igniting high inflation. But rate increases also make borrowing costlier for households and companies and can weaken the pace of growth.
Trump’s tweet on Friday followed more extensive criticism he made of the Fed’s rate hikes in an interview with CNBC in which he said, “I don’t like all of this work that we’re putting into the economy and then I see rates going up.”
Trump acknowledged in the interview that his comments would likely raise concerns. The White House traditionally does not comment on Fed policy out of concern that it could raise doubts in financial markets about the Fed’s commitment to keeping inflation under control.
Mnuchin’s comments to reporters came at a meeting of finance ministers and central bank presidents from G-20 countries. The United States is being represented at the gathering by Mnuchin and Federal Reserve Chairman Jerome Powell, who was selected last year by Trump to succeed Janet Yellen as Fed chairman after Trump decided not to give Yellen a second term.
The Fed has had no comment on Trump’s interview comments or his tweet but last week Powell said in an interview that the Fed had a long tradition of conducting policy in a way that is “independent of all political concerns.”
With respect to the onging trade battles set off Trump’s get-tough policies, Mnuchin said that the overall U.S. economy has not been harmed by them although some individual sectors have been hurt.
“Certain countries have targeted very specific levels of things that are not coincidental,” Mnuchin told reporters. “So if you are looking at lobsters in Maine or you are looking at bourbon in Kentucky or you are looking at soybeans, there are clearly markets being followed.”
Mnuchin said that the administration would be “looking at different opportunities to help the farmers” and provide assistance to other sectors being “unfairly targeted” by tariffs from other nations.
“But I still think from a macro basis, we do not see yet any impact on what’s a very positive growth” performance for the U.S. economy this year, Mnuchin said.
Also speaking in Buenos Aires at the G-20 summit, International Monetary Fund Managing Director Christine Lagarde said the recent series of trade tariffs would significantly harm the global economy.
“In the worst case scenario under current measures” the impact on the global economy “is in the range of 0.5 percent” of gross domestic product on a global basis, Lagarde said.
The United States and China are now in a full-blown trade war with both nations imposing tariffs on billions of dollars of each other’s goods with even bigger tariffs being threatened.
Source: Associated Press