Former Fed SVP: Trump’s attacks are ‘the worst possible outcome’

Kristin Myers

Michael Cox, former Chief Economist and Senior Vice President of the Federal Reserve Bank of Dallas, doesn’t think President Trump’s assailing of the Federal Reserve is a good idea.

“I think it’s a big mistake for any president to criticize the Fed openly like that,” Cox said on Monday’s Midday Movers. “Because markets need the Fed to be independent. The Fed was made independent from the government for a good reason. And to do things which damage that independence is just really — that’s the worst possible outcome.”

Trump, who often uses the stock market as a report card of his presidency, slammed the Fed for interest rate hikes after the market tumbled last week amid fears of higher rates.

‘The Fed is going wild’

“The Fed is going wild,” Trump said last week. “I mean, I don’t know what their problem is, but they’re raising interest rates and it’s ridiculous.” On Tuesday, the president called the Fed his “biggest threat.”

U.S. President Donald Trump introduces his nominee for the chairman of the Federal Reserve Jerome Powell during a press event in the Rose Garden at the White House, November 2, 2017 in Washington, DC. (Photo by Drew Angerer/Getty Images)
U.S. President Donald Trump introduces his nominee for the chairman of the Federal Reserve Jerome Powell during a press event in the Rose Garden at the White House, November 2, 2017 in Washington, DC. (Photo by Drew Angerer/Getty Images)

The Fed has raised interest rates three times this year so far, most recently in September. It’s the eighth time since the end of 2015. The Fed has signaled that there will be one more hike before the end of the year.

And despite criticizing the President for his remarks, Cox agrees with the President’s desire for the Fed to slow down rate hikes. Pointing to the current inflation as a result of the Fed’s quantitative easing that “put too much money into the economy,” Cox also believes it’s time to reconsider another rate hike.

“I think the Fed should take a pause,” he said. “I think that we’ve had enough rate increases for a little while. It’s time to take a pause. And I’m not being political here. It turns out that I agree with what the policy implications that Trump is saying are, which is the Fed to take a pause.”

Kristin Myers is a reporter for Yahoo Finance. Follow her on Twitter.

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