Fed Should Lower Rates If The Market Does Well, Trump Says

Donald Trump said he expects his Federal Reserve chair to lower interest rates if the economy is doing well, the latest signal that the president is eager for a nominee committed to borrowing cost cuts as he nears an announcement of his choice to replace Jerome Powell.

“I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market for no reason whatsoever,” Trump said in a social media post Tuesday. “Anybody that disagrees with me will never be the Fed Chairman!”

Trump has repeatedly said he's interested in breaking recent trends, where promising economic data is sometimes met by a market selloff due to concerns over inflation and corresponding hikes by the Fed.

“In the old days, when there was good news, the Market went up,” Trump wrote. “Nowadays, when there is good news, the Market goes down, because everybody thinks that Interest Rates will be immediately lifted to take care of ‘potential' Inflation.”

Tuesday bucked the trend described by the president. The Bureau of Economic Analysis reported that inflation-adjusted gross domestic product increased at a 4.3% annualized pace in the third quarter, higher than all but one estimate in a Bloomberg survey. But the S&P 500 rose for the fourth consecutive day, closing at a record high.

Marshall Front, senior managing director at Front Barnett, said the “good news is bad news” paradox dates back decades.

“Sane heads will eventually prevail, and the data will ultimately drive the way people interpret things,” Front said in a phone interview. “Wall Street is focused on economic fundamentals. The economy is on strong footing, and that will support corporate profits, and that's what matters for Wall Street.”

The president's latest commentary comes as he is looking to new leadership at the Fed to help reduce borrowing costs, as he increasingly feels political pressure to address voter concerns over affordability. Trump has repeatedly said lower rates could help the housing market, and that he wants to be consulted by his eventual central bank pick on how to navigate rate decisions.

The president last week said he had narrowed his list for Fed chair nominees to “three or four” candidates and expected to have a decision pretty quickly, with an announcement “over the next couple of weeks.”

Trump has indicated Kevin Hassett, director of the National Economic Council, and Kevin Warsh, a former Fed governor, were among the frontrunners for the job. He's also interviewed — and praised — Fed Governor Christopher Waller.

“I think every one of them would be a good choice,” Trump said.

The Fed earlier this month lowered its benchmark rate to between 3.5% and 3.75%, its third cut in as many meetings. Three central bank officials dissented from the decision and the Federal Open Market Committee remains undecided about further reductions. Trump has previously called for the central bank to cut benchmark rates to around 1%, or perhaps lower.