The rivalry between President Donald Trump and Federal Reserve Chairman Jerome Powel has now become an open secret. It has become quite common to find frequent blame game that puts the Federal Reserve in the red spot.
It has happened once again. President Trump squarely blamed the Federal Reserve for the risky situation that the US economy has been recent. However, the central bank claims that the economy is fairly in a good state, and there is nothing to worry about.
That is exactly what has been worrying Trump, who is seeking re-election this year. There are several reasons that Donald Trump would be worried about. The growth rate has been under 3 percent; no resolution is in sight for the Sino US trade conflict, and there is a widening trade deficit.
The fact is that Trump sees the federal Reserve as the biggest obstacle in tackling the recession or a possibility of such a scenario. That is exactly why he has been making the Federal Reserve a scapegoat of sorts and wants it to take actions that would help take effective care of the possible recession.
It should be noted here that the Federal Reserve has its plans set for the long term results. In contrast, Trump has his immediate interests. The Federal aims at its long terms goals that include maximum employment, stable prices, and moderate long-term interest rates. These have always been in conflict with the political priorities that the ruling side may be having.
While two more rate cuts are likely in the months coming up, the Federal still believes that the situation is still not out of control and there would not be any downturn anytime soon.