One reason stocks have been declining is because of the partial U.S. government shutdown over Trump’s demand for billions of dollars for a wall on the Mexican border, his top campaign promise. On that issue, Trump gave little ground on Tuesday, saying that the agencies won’t reopen “until we have a wall, a fence, whatever they’d like to call it.”
Trump’s comments on Mnuchin followed the secretary’s convening of an emergency meeting with top U.S. financial regulators on Monday, following a call with executives from six major banks the previous day. The Treasury Department issued a statement Sunday saying banks have adequate liquidity for lending, surprising investors who didn’t know that might be an issue.
Powell Stance
The president’s remarks on the Fed could potentially alleviate concern that Trump would try to remove Powell, even if the president didn’t explicitly say that he won’t fire the central bank chief. Mnuchin said in a pair of tweets Saturday evening that he’d spoken with the president about the matter, and he quoted Trump saying he didn’t believe he had the authority to remove the Fed chairman.
“Well, we’ll see,” Trump said Tuesday when asked about his confidence in Powell. “They’re raising interest rates too fast. That’s my opinion. But I certainly have confidence. But I think it will straighten. They’re raising interest rates too fast because they think the economy is so good. But I think that they will get it pretty soon. I really do. I mean, the fact is that the economy is doing so well that they raised interest rates and that is a form of safety in a way.”
Trump’s comment about safety may be a reference to the idea that higher interest rates would give the Fed more room to cut in order to cushion the economy in case of a downturn.
This article was provided by Bloomberg News.