President Donald Trump on Tuesday demanded that the Federal Reserve cut rates even more after the central bank announced it would slash rates by 50 basis points in an effort to combat the economic impact of the coronavirus outbreak.
The Fed “must further ease and, most importantly, come into line with other countries/competitors,” Trump tweeted.
“We are not playing on a level field. Not fair to USA. It is finally time for the Federal Reserve to LEAD. More easing and cutting!”
The Fed on Tuesday slashed interest rates by half a percentage point in response to slower economic growth from the deadly coronavirus outbreak. After the move, markets began fluctuating, dipping into and out of negative territory, amid fears of a virus-related global slowdown. The market turned solidly red in afternoon trading, as the 10-year treasury yield dropped below 1% for the first time in history.
Fed Chairman Jay Powell on Tuesday addressed the decision to cut rates, emphasizing that it stemmed from the economic impact of the coronavirus outbreak. “The magnitude and persistence of the overall effects on the economy, however, remain highly uncertain and the situation remains a fluid one,” he said at a news conference.
“We have eased the stance of monetary policy to provide some more support to the economy,” he added, also stressing that the fundamentals of the economy remain strong.
Treasury Secretary Steve Mnuchin praised the central bank on Tuesday for cutting interest rates, saying, “I applaud the Fed on this move.”
Trump, who has used stock market gains as a measure of his presidency, has been hammering the Fed to cut interest rates, tweeting Monday that the Fed is falling behind its global peers.
“As usual, Jay Powell and the Federal Reserve are slow to act. Germany and others are pumping money into their economies. Other Central Banks are much more aggressive,” Trump said, referring to the Fed chairman.
“The U.S. should have, for all of the right reasons, the lowest Rate. We don’t, putting us at a … competitive disadvantage. We should be leading, not following!” he added.
Currently, the Fed benchmark rate stands in a range of 1% to 1.25%.
The Fed’s move to lower rates came the same morning the G-7 announced that it would commit unspecified tools to help the global economy deal with the threat, and as Wall Street was in the midst of another market sell-off.
The market turned in its worst performance since the financial crisis last week, when the Dow Jones Industrial Average fell more than 12%. It made up some of that ground Monday, rising more than 1,200 points, for the biggest one-day point gain ever.
Later Tuesday, Trump reiterated his disappointment in the Fed’s decision, telling reporters the Fed is “following, not leading.”
— CNBC’s Jeff Cox contributed to this report.