March 03, 2020
This was in an early morning tweet. Trump actually said that, when it comes to interest rates, “we should be paying less,” but that also means that we should be receiving less. In fact, our interest rates would be expected to be higher than in places like the eurozone, since our inflation rate is also roughly 1.0 percentage point higher.
But Trump is right that the Fed should lower interest rates, but it probably makes little difference whether it does so now or waits until its meeting later this month. Long-term rates, which are what has the most impact on the economy, have already tumbled to record lows. It’s likely that Trump’s whining has made Fed Chair Jerome Powell less likely to act early since he does not want to appear to be responding to Trump’s complaints.