The Scoop
One of Donald Trump’s top economic advisers criticized the Federal Reserve’s big interest-rate cut as election “interference,” setting the stage for which candidate gets to take credit for what appears to be a soft economic landing.
“The Fed very inappropriately placed its thumb on the election’s scales,” Trump economic adviser Stephen Moore tells Semafor, saying the larger cut “screams of interference … Why couldn’t this wait until the day after the election?”
The Fed opted for a half-percentage-point cut yesterday to borrowing costs to head off signs of weakness in the jobs market.
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Trump has said he wants a “say” over how the Fed steers the economy, which it does largely by setting borrowing costs and fiercely protects its independence. The former president is a known fan of cheap debt, which helped him build his real-estate empire.
Liz’s view
The quick reaction from Trump land shows that the economy is in good shape. The fight is now about who gets to take credit. The unemployment rate is ticking up, but at 4.2% is historically low. Layoffs aren’t rising. There are enough jobs for most people who want one and enough workers to fill most job postings, which should keep real wages rising but not inflationary. With a sightline to base borrowing rates in the 3% range, money costs enough to keep a lid on the financial nonsense of the free-money era, but not too much to stifle growth. The dollar is strong and stable.
“The labor market is actually in solid condition, and our intention with our policy move today is to keep it there,” Fed Chair Jerome Powell said in yesterday’s press conference. “You can say that about the whole economy.”
Powell sounded as close as Fed officials, a reserved bunch, come to claiming victory. Trump’s camp wanted to be the one to unveil the Mission Accomplished banner.