On Friday, President Trump Escalated his Feud with the Fed over interest rates.
Vice President Mike Pence and White House National Economic Council Director Lawrence Kudlow—echoing President Trump’s comments Tuesday—called on the Fed to lower interest rates, saying the economy’s engine could handle more fuel.
“The economy is roaring,” Mr. Pence said Friday in a CNBC interview, not long after the Labor Department reported the jobless rate had fallen to 3.6% in April, the lowest level in 50 years. “This is exactly the time not only to not raise interest rates, but we ought to consider cutting them.”
It isn’t unprecedented for politicians to lean on the Fed to cut interest rates and give the economy the kind of jolt that voters reward at the polls. President Nixon pressured Fed Chairman Arthur Burns to keep rates low right before the 1972 election.
But it is rare for the White House to take on the Fed so openly, analysts said. “It not only breaks the norms, it shatters them,” said Laurence Meyer, a former Fed governor. “It’s just amazing.”
The amazing thing is not that Trump is doing anything unusual. The unusual is the norm.
Rather, the amazing thing is the logic the administration used.
If you can't hike rates when the "economy is booming" then you can never hike rates because you don't hike rates when the economy is doing poorly.
We can debate whether the economy is booming. Despite Friday's jobs report, it's pretty clear the economy is slowing.
But that' not the argument Pence presented. Pence wants to cut rates despite his claim that the economy is booming. That's the amazing thing.
Mike "Mish" Shedlock