Trump backs Mnuchin, Fed as stock prices tumble
WASHINGTON — President Donald Trump expressed confidence in the Treasury secretary, Federal Reserve and U.S. economy Tuesday, moving to calm financial markets after a report that said he 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 president, after addressing U.S. armed forces personnel on a Christmas Day video conference call, said the Fed is raising interest rates because the “economy is doing so well,” adding that U.S. companies are having “record kinds of numbers” and it’s a “tremendous opportunity to buy.”
The remarks were 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 has discussed dismissing the Fed chairman, who was recommended by Mnuchin.
The Standard & Poor’s 500-stock index fell 2.7 percent Monday in its worst-ever trading session before the Christmas holiday. The index is on the brink of a bear market, just shy of its first 20 percent decline since 2009.
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 increases, 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 Twitter post 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.”
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, after a call with executives from six major banks the previous day. The Treasury Department said Sunday that banks have adequate liquidity for lending, surprising investors who didn’t know that might be an issue.