President Donald Trump attacked the Federal Reserve on Thursday, saying he disagreed with the course taken by the central bank and its chairman, Jerome Powell, whom Trump nominated to the position last year.
“I don’t necessarily agree with it,” Trump told CNBC about the Fed’s two rate hikes so far this year. “I’m not thrilled, because every time we go up, they want to raise rates again. But at the same time I’m letting them do what they feel is best.”
Markets whiplashed on Trump's comments, with the Dow Jones dropping more than 100 points and the dollar taking a brief stumble.
Let our news meet your inbox. The news and stories that matters, delivered weekday mornings.
The White House released a statement shortly after the president's statement was released.
"Of course the president respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions," spokeswoman Lindsay Walters said.
"The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments."
It’s rare for a sitting president to comment on the Fed, which is supposed to remain immune to political pressure.
“No president should interfere with the workings of the Fed,” Richard Fisher, a former Fed president, told CNBC. “One of the hallmarks of our great American economy is preserving the independence of the Federal Reserve.”
Trump's comments could potentially set up a war of words with Powell, who earlier this week pointedly noted in testimony to the Senate Banking Committee that "countries that haven't erected barriers including tariffs have grown faster" than those who adopted protectionist policies.
Trump on Wednesday doubled down on his plan to implement punitive tariffs with America's trading partners, threatening the European Union with "tremendous retribution" if officials there did not offer a better deal on auto trade.
In his first five months as Fed chairman, Powell has twice raised the benchmark interest rate by one-quarter of a point and has projected two more hikes before the end of the year. His predecessor, Janet Yellen, who held the position for four years, kept the rate artificially low to allow the economy to grow back after the 2008 recession.