By Jennifer Jacobs and Saleha Mohsin
Bloomberg News
WASHINGTON, D.C. — President Donald Trump said he expected Jerome Powell to be a cheap-money Fed chairman and lamented to wealthy Republican donors at a Hamptons fundraiser on Friday that his nominee instead raised interest rates, according to three people present.
The Federal Reserve has raised rates five times since Trump took office, including twice this year under Powell. The president nominates the Fed’s chairman and other governors in Washington, but the agency is independent and has historically frustrated presidents by raising interest rates without regard for politics.
Trump has publicly lamented the central bank’s recent rate increases, but his private remarks to donors are the most personal criticism of Powell’s performance to emerge so far. The people who described the comments asked not to be identified because the fundraiser was closed to the public.
His jabs built on an attack he leveled at Powell’s Fed in July, when he pronounced himself “not thrilled” with the rate increases. That broadside, in an interview with CNBC, broke with a more than two-decade-old norm of presidents avoiding comments on monetary policy out of respect for the Fed’s independence.
The dollar, as measured by the Bloomberg Dollar Spot Index, reached its weakest level of the day following the report on Trump’s comments at the fundraiser.
Even as Trump complains, the Fed is moving more slowly to raise interest rates than it has in previous economic expansions. Interest rates are low by historical standards given an unemployment rate below 4 percent and, in recent months, accelerating economic growth.
Powell and his colleagues have justified a cautious approach toward increasing rates by pointing to sluggish inflation, which has shown no sign of jumping significantly past the Fed’s 2 percent target.
The Fed last raised rates in June, to a target range of 1.75 percent to 2 percent. That’s seen by most economists as below the so-called neutral rate of interest by about 1 percentage point, meaning the Fed is still adding fuel to U.S. growth rather than restraining the economy.
The Fed has penciled in two more interest rate increases this year, according to projections it updated in June. Investors see a 90 percent chance that the Fed will raise rates at its September meeting.
White House spokesman Hogan Gidley and Federal Reserve spokesman David Skidmore declined to comment.
About 60 people attended Trump’s fundraiser at the Southampton home of Howard Lorber, the chairman of hot dog company Nathan’s Famous. Guests included Chicago Cubs co-owner Todd Ricketts; John Catsimatidis Jr., the son of Red Apple Group Chairman John Catsimatidis; Republican National Committee Chairwoman Ronna Romney McDaniel; Commerce Secretary Wilbur Ross; Treasury Secretary Steven Mnuchin; White House Chief of Staff John Kelly; and senior White House aides Jared Kushner and Dan Scavino.
Trump held a discussion with a small group and then made remarks to a larger group over a dinner of salad with chicken in a tent in Lorber’s yard. It was a humid night and Trump joked that Lorber could have afforded better air conditioning, according to one of the people.
An RNC spokeswoman said the event raised about $3 million for the Trump Victory Committee, which benefits both the president’s campaign and the party.
