If you want a dovish monetary policy, don’t appoint a hawk as Federal Reserve chairman.
That is the most recent lesson that political neophyte and U.S President Donald Trump seems to be learning.
Or at least that’s the conclusion any reasonable person in these unreasonable times might draw based on what the president says.
Of course, Trump says a lot of things, many of which seem spontaneous, provocative, at odds with the facts or outrageous — often some combination of the above. Others seem more thoughtful, tactical and calculated. They all come in an endless fire hose of tweets, asides, interviews and rally speeches.
Investors have figured out that most of these are of little consequence and are designed for political purposes, often to energize Trump’s base of supporters. That’s fine — all presidents do it to some extent or another. Yes, there can be real and serious geopolitical repercussions or impact on the markets from presidential pronouncements, but most of Trump’s are not precise policy statements.
But there are exceptions. That may well be the case in the drumbeat of criticism Trump has directed at the person he personally put in charge of the Fed, Jerome Powell. Let’s consider a few points:
• Candidate Trump hates low interest rates.
• President Trump loves them.
• Candidate Trump said then Fed Chair Janet Yellen should be “ashamed” about low interest rates.
• President Trump ditches Yellen, an inflation and interest-rate dove and replaces her with Powell, an inflation and interest-rate hawk.