Former President Donald Trump and his close allies swiftly seized on a surprisingly high inflation report released Thursday to launch scathing criticisms of the Biden-Harris administration, the Federal Reserve, and its chairman, Jerome Powell.
Speaking at the Detroit Economic Club, Trump asserted, “The fact is that the Federal Reserve brought the interest rates down a little too quickly.” He described the rate cut as excessive and suggested it was a politically motivated decision made in advance of the upcoming election. “It was too big a cut, and everyone knows that was a political maneuver,” he added.
This marked one of Trump’s most direct critiques of Powell in recent months. Previously, the GOP nominee had been more focused on discussing the broader economic landscape rather than specifically targeting the central bank. “It was totally a political decision, and inflation has started to rise,” Trump declared, arguing that high interest rates “really kill the American dream for young people.”
The pro-Trump Super PAC, Make America Great Again, Inc., also weighed in, stating in a release that Thursday’s inflation data could represent “the Fed’s worst nightmare.”
According to the Consumer Price Index, overall prices rose by 2.4% over the past year, indicating a slight slowdown from August’s 2.5% annual increase. However, this moderation was overshadowed by a monthly increase of 0.2% in September compared to August, which exceeded economists’ expectations of a 0.1% rise.
In response, Democrats, including members of the Biden-Harris administration, highlighted the annual inflation rate. National Economic Adviser Lael Brainard noted in a statement that “inflation has fallen back down to 2.4%, the same rate as right before the pandemic.” The Federal Reserve’s Open Market Committee is not scheduled to meet again until after the upcoming Election Day, and Thursday’s inflation report seemed to bolster calls from some central bank hawks for a more measured approach to future interest rate cuts.
Despite Trump’s assertions, initial reactions suggested that the Fed’s strategy is unlikely to shift significantly. HSBC Chief Multi-Asset Strategist Max Kettner stated in a Yahoo Finance interview that 25 basis point cuts at the final two meetings of the year are “pretty much baked into the cake.”
Atlanta Fed President Raphael Bostic, however, expressed in an interview with The Wall Street Journal that he was “totally comfortable” maintaining the current rate in the upcoming month, indicating he had already accounted for just one more rate cut this year.
Trump’s comments on the campaign trail could signal a resurgence of political challenges for Powell, which have fluctuated throughout 2024.
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