Donald Trump expressed confidence in the Treasury secretary, Federal Reserve and U.S. economy on Tuesday, moving to calm financial markets further roiled after Bloomberg News reported that the president had discussed firing the central bank’s chairman over raising interest rates.
Trump, asked if he has confidence in Treasury Secretary Steven Mnuchin, said, “Yes I do, very talented guy, very smart person.” Asked about Fed Chairman Jerome Powell, Trump said the central bank is “raising interest rates too fast” but he has “confidence” that the Fed will “get it pretty soon.”
The dollar rose and U.S. equity futures advanced Wednesday after a volatile start as investors assessed the comments. Futures on the S&P 500 Index jumped 0.7 percent as of 7:26 a.m. New York time, the first advance for futures in two weeks and the largest climb in more than three weeks.
The president -- answering reporters’ questions at the White House after addressing U.S. armed forces members on a Christmas Day video conference call -- said the Fed was hiking borrowing costs because the “economy is doing so well,” adding that U.S. companies were having “record kinds of numbers” and it’s a “tremendous opportunity to buy.”
The remarks represent Trump’s first expression of public support for Mnuchin and Powell since people familiar with the matter told Bloomberg News last week that the president had discussed dismissing the Fed chief, who was recommended by Mnuchin. Before Tuesday’s comments, one person familiar with the president’s thinking said that Trump had also weighed dismissing Mnuchin, while another said that Mnuchin’s tenure may depend in part on how much markets continue to drop.
Trump’s frustration with Mnuchin is rising after his attempts to calm Wall Street failed, CNN reported, citing a source close to the White House, who said that the treasury secretary could be in “serious jeopardy” with the president.
The S&P 500 stock index tumbled 2.7 percent on Monday in its worst-ever trading session before the Christmas holiday. Further declines in stock futures Wednesday in Asia suggested that the benchmark for American equities were nearing a bear market until they turned around as U.S. markets were poised to open.
Blaming Fed
As stocks rose for most of Trump’s first two years in office, the president frequently pointed to the gains as a sign of his success. Since they began falling, he’s often blamed the Fed and its interest-rate hikes, even though investors are becoming increasingly concerned about the impact of the administration’s trade battles with China and Europe.
Trump’s Oval Office remarks Tuesday contrasted with a tweet on Monday saying “The only problem our economy has is the Fed. They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders.”