WASHINGTON: U.S. President Donald Trump said on Friday that the Federal Reserve had made a mistake by raising interest rates and blamed the central bank for hurting the U.S. economy and stock markets.
"Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0 percent GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!," Trump tweeted.
The remarks were part of a new broadside against the independent central bank by the White House in an unusual public split. The Fed's Board of Governors did not immediately comment.
Prior administrations have taken care not to comment on Fed policy, but Trump has railed repeatedly against the U.S. central bank's rate hikes. Friday's comments were uniquely specific about the course of action now favored by the president.
The president's top economic adviser said on Friday that the White House would like the Fed to reverse some recent rate hikes and stop shrinking its bond holdings to protect the U.S. economy from weakness overseas.
"This is our view. This is his view. This is my view," National Economic Council Director Larry Kudlow told CNBC, confirming that he had told news website Axios that he would like the Fed to cut rates by a half-percentage point and stop cutting its bond holdings.
"The Federal Reserve is an independent central bank. They're going to do what they're going to do."
Stephen Moore, a prospective presidential nominee to an open seat on the Fed Board, also weighed in on Friday.
He told Fox News that he would consider reversing the Fed's December interest rate hike but said he was not necessarily in favor of the half-point rate cut recommended by Kudlow. Moore was quoted as saying he favored such a cut by the New York Times on Tuesday.
The Fed last week brought a three-year rate-hike cycle to an abrupt end as it abandoned projections for any further increases in borrowing costs this year and said it would stop shrinking its bond holdings in September.
The Fed bought bonds in the aftermath of the financial crisis to stimulate the economy but started letting those holdings run off in 2017 in an effort to put its policy back on normal footing.
While Kudlow said he felt the Fed had gone too far with rate hikes, he said the Trump administration was standing by Fed Chairman Jerome Powell.
"He's our chairman. We're not going to displace him."
(Reporting by Tim Ahmann, Trevor Hunnicutt and Eric Beech; Writing by Trevor Hunnicutt; Editing by James Dalgleish)