Trump: "Fed Rates Are High"... Pressure to Cut Benchmark Interest Rate

[Image source=EPA Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] On the 29th (local time), U.S. President Donald Trump pressured the Federal Reserve (Fed) to lower the benchmark interest rate while mentioning the novel coronavirus disease (COVID-19) situation.

At a press conference held at the White House regarding the COVID-19 situation, President Trump said, "The Fed needs to start being a leader," and added, "We need to adopt the lowest benchmark interest rate. The Fed's rate is high."

He continued, "Look at Germany, Japan. Look at other countries," and said, "Many of them maintain negative interest rates. We are not in that position because of the Fed."

President Trump emphasized, "And now we have this problem (COVID-19)," adding, "You have seen Germany lowering rates and pouring in a lot of money. We have not heard the Fed say 'we must do this.'"

He also criticized, "We can refinance debt at lower rates," and said, "The Fed is making us pay more than we should. That is ridiculous."

Fed Chair Jerome Powell stated in an emergency statement the day before, "We will act appropriately to support the economy and use our tools."

Chair Powell pointed out, "The fundamentals of the U.S. economy remain strong," but "the coronavirus is increasing risks to economic activity." He emphasized, "The Fed is closely monitoring developments, economic outlook implications, and so forth."

In the market, there was speculation that Chair Powell hinted at the possibility of lowering the benchmark interest rate if the situation worsens.

President Trump also said at a meeting with reporters right after Chair Powell's emergency statement the day before, when asked if Fed's countermeasures were needed, "I hope the Fed intervenes quickly."

Earlier, the Fed lowered the benchmark interest rate at the end of July last year for the first time in 10 years and 7 months due to concerns over the U.S.-China trade dispute and global economic slowdown. It then cut the rate by 0.25 percentage points each in September and October of the same year.

Since December last year, the benchmark interest rate has been kept steady. The current U.S. benchmark interest rate is 1.50?1.75%.

President Trump also commented on the sharp drop in the New York stock market, saying, "The market will come back," and added, "The market is very strong."

The major indices of the New York stock market recorded the "worst week" since the 2008 financial crisis. The Dow Jones Industrial Average fell by about 3,580 points over five trading days from the 24th.