President Donald Trump demanded that Federal Reserve Chair Kevin Warsh and other policymakers cut interest rates Friday, threatening to halt trade with countries that run surpluses with the United States if the central bank doesn't lower borrowing costs.
Trump's warning came hours after the Labor Department reported that U.S. employers added 162,000 jobs in August, nearly triple the 56,000 gain economists surveyed by Reuters had expected. The unemployment rate held at 4.1%, while the stronger-than-anticipated report increased financial-market expectations that the Fed could raise, rather than cut, rates at its Sept. 15-16 meeting.
"EMPLOYERS ADDED 162,000 JOB IN AUGUST. Lower the interest rates because the U.S.A. is a much stronger credit than it was just a short time ago!" Trump wrote on social media.
The president said the U.S. "should have the LOWEST RATE of any country in the World, like 'the old days.'" He has repeatedly argued that comparatively high U.S. borrowing costs put American companies and the federal government at a disadvantage.
Trump then linked monetary policy to trade, raising the prospect of restricting commerce with countries that sell more goods and services to the U.S. than they buy.
"Without the United States agreeing to allow them their big surpluses, and we could stop that immediately, they would no longer be considered financially ELITE! LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT, which the U.S. Supreme Court, in its ridiculous and very costly Tariff decision, strongly acknowledged 'the President' has an absolute right to do," Trump wrote. Reuters reported the threat Friday.
Trump also directly addressed Warsh and the Federal Open Market Committee, telling them to "get smart."
"BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won't allow that to happen!" Trump said.
The demand puts Trump publicly at odds with the signal financial markets took from Friday's employment report. After the payroll figures were released, traders increased bets on a Fed rate increase this month, with the probability implied by futures markets rising to about 65%, Reuters reported. U.S. stocks fell as investors reassessed the interest-rate outlook.
The jobs report showed a notable acceleration from the sluggish labor-market performance of the preceding year. August's 162,000 payroll increase compared with an average monthly gain of only 31,000 over the previous 12 months, according to the Bureau of Labor Statistics. June and July employment figures were also revised upward by a combined 55,000 jobs.
