NEW YORK: President Donald Trump lashed out at the Federal Reserve Monday after administration officials spent the weekend trying to assure the public and financial markets that Jerome Powell’s job as Fed chairman was safe.

The president has expressed frustration over the Fed’s decision to raise its key short-term rate four times this year. Those moves are intended to prevent the economy from overheating at a time of brisk growth and an unemployment rate near a half-century low.

At a news conference last week, Powell explained that the rate hikes were evidence of the economy’s strength. But Trump sees the increases which lead to higher borrowing costs for consumers and businesses as an economic and political threat.

“The only problem our economy has is the Fed,” the president tweeted Monday. “They don’t have a feel for the Market, they don’t understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders. The Fed is like a powerful golfer who can’t score because he has no touch he can’t putt!” Trump’s tweet was met with concern that any attempt to attack Powell or remove him from office could destabilize the economy.

“He is seeking open warfare on Christmas Eve,” said Peter Conti-Brown, a financial historian at the Wharton School of the University of Pennsylvania. “We’ve never seen anything like this full-blown and full-frontal assault. This is a disaster for the Fed, a disaster for the president and a disaster for the economy.” Trump’s attacks amount to an intrusion on the political independence of the Fed, which exists to determine the flow of money based off economic data on employment and inflation.

Fed independence has long been among the bedrocks of the US financial markets. It ensures that central bankers can make politically unpopular decisions, such as fighting high inflation in the 1980s or rescuing banks after the 2008 financial crisis.

Stocks did decline after Powell announced this year’s fourth rate hike on Wednesday. But the sell-off appeared to reflect concerns that the Fed was moving too fast in its plans to raise rates and shrink its vast portfolio of bonds given an economic slowdown that is expected in 2019.

The president expressed his displeasure Monday with the Fed after Treasury Secretary Steve Mnuchin tweeted on Saturday that Powell’s job was safe.

Mnuchin also said on Twitter on Sunday that he had checked with the heads of the six largest US banks to ensure that they had enough liquidity to operate in a stock market that has tumbled sharply since October.

But the stock market was far from comforted by an administration that has been prone to tumult. The Dow Jones industrial average slumped 1.8 per cent in trading through early Monday afternoon.

Published in Dawn, December 25th, 2018