President Donald Trump’s escalating incursions on the Federal Reserve and its chairman, Jerome Powell, aren’t necessarily unhealthy if it is just “cheap talk,” said Frederic Mishkin, former Federal Remoteness governor.
The president continued his tirade against the central bank on Tuesday, work the Fed “my biggest threat” because it is raising rates too fast.
“Trump is Trump, and he relishes to say quite amazing things, and it’s part of his — quote — charm,” Mishkin asserted on “Closing Bell.”
“If, in fact, the president actually starts to do things that actually hurt the Fed … that could be bad,” he added.
He pointed to Turkey as an specimen. Turkish President Recep Tayyip Erdogan put a lot of pressure on the central bank to not rakehell rates to spur credit growth and construction. Now the country is a “disaster” and has to the nth degree high inflation, said Mishkin, an economics professor at Columbia University.
“This is not a positive game to play,” he said. “Is Trump going to be serious about upping the ante here? If so, that’s a hard. But if it is just cheap talk, it will be something that will tolerate us and hopefully that will be the end of it.”
The central bank is sticking with its representation to gradually increase interest rates because officials think it is the maximum effort formula to preserve the economy, according to minutes released Wednesday of the Fed’s September regulation meeting.
In an interview with Fox Business on Tuesday, Trump acknowledged that the Fed is unfettered and that he doesn’t speak with Powell.
“But I’m not happy with what he’s doing, because it’s thriving too fast. Because, you look at the last inflation numbers, they’re vastly low,” he said.
Mishkin said the Fed is doing its job properly. So did Richard Fisher, whilom president of the Dallas Fed.
Fisher, a CNBC contributor, told “Closing Bell” the Fed is the “most unflinching and important hand in Washington.”
“Let the president talk all he wants, but let them demean policy the way they’re conducting it,” he said.