President Donald Trump summoned Federal Reserve Chair Jerome Powell to the White House Monday for a meeting about the economy only a few weeks after labeling Powell a “bonehead,” a “terrible communicator” and an “enemy.”
The Fed released a statement at 10:28 a.m. saying the meeting occurred “at the president’s invitation” and that Powell told President Trump that the Fed will continue to set interest rates “based solely on careful, objective and non-political analysis.”
The meeting was in the White House residence, not the Oval Office, a White House official said. Treasury Secretary Steven Mnuchin was also present.
Trump tweeted at 10:49 a.m. that the discussion was “very good” and “cordial.” Trump claimed that a range of topics were discussed, including interest-rate policy and the possibility of negative interest rates where banks pay people to take out loans.
The president’s statement appears to contradict the Fed’s, which goes out of its way to say that Powell did not talk about whether the Fed is likely to raise or lower the benchmark interest rate in the future. Last month, the Fed reduced the U.S. interest rate to just shy of 1.75% – the third cut this year.
“Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.,” Trump tweeted Monday at 11:01am after deleting his initial tweet.
Trump has repeatedly bashed the Fed to lower rates further, even suggesting that the nation should have negative interest rates like Japan and much of Europe, a scenario that has never occurred before in the United States and typically happens only when an economy is in a dire place.
Powell told Congress last week that negative rates are “certainly not” appropriate right now. The U.S. economy is growing at a solid pace, stocks are at record highs, inflation is mild, and jobs remain plentiful with unemployment sitting at 3.6%, the lowest level in nearly half a century.
While it is not unusual for presidents to meet occasionally with Fed chairs, the central bank is supposed to be an independent agency. Recent presidents have refrained from commenting on the Fed at all. But Trump has broken that precedent by publicly berating Powell at length, even going as far as saying, “China is not our problem, the Federal Reserve is!”
The president has suggested that he would like to fire Powell, but that is not allowed by law.
Trump nominated Powell for the top Fed post in 2017, but the president quickly soured on him. Trump has spent the past year blaming Powell for harming the economy by keeping interest rates too high. But most economists and business leaders say the real drag on the economy this year has been Trump’s unpredictable trade war.
Still, as the stock market hit fresh highs on Friday and fears of a recession have eased since the summer, Trump appears to be softening a bit on Powell. Trump has tweeted four times about the Fed since the central bank’s last interest rate decision on October 30, noticeably less than the 43 times he tweeted or retweeted about the Fed leading up to the central bank’s September meeting.
While Trump directs most of his ire at Powell, Fed decisions are discussed by a committee that can have up to 19 members (17 seats are full at present). All current Fed leaders continue to back Powell and most have joined the chair in publicly decrying the idea of negative interest rates in the United States.
“There would be an extremely high hurdle for me to support negative interest rates,” said Patrick Harker, president of the Philadelphia Fed at a Society for Advancing Business Writing and Editing conference last week. “In the case of a recession, the best response may not be negative rates but a bigger fiscal stimulus.”