Skip to content Skip to footer

Trump Alleges Fed Chair Is Conspiring With Obama to Keep Interest Rates Low

He previously lauded her low interest rate policy.

US Federal Reserve Chair Janet Yellen speaks at an International Monetary Fund seminar on April 16, 2013, in Washington, DC. (Photo: International Monetary Fund)

Donald Trump hit out at Federal Reserve Chair Janet Yellen, questioning her independence from President Obama and the wisdom of low interest rates.

“She’s keeping them [interest rates] artificially low to get Obama retired,” he said on CNBC. “It’s a very serious problem.”

“I think she’s very political, and to a certain extent I think she should be ashamed of herself,” he added.

“Any increase at all will be a very, very small increase because they want to keep the market up so Obama goes out and let the new guy … raise interest rates … and watch what happens in the stock market,” Trump also said.

The Fed’s Open Market Committee (FOMC) voted to raise interest rates by a quarter of a percentage point in late 2015. It marked the first time since 2006 that the Central Bank increased the cost of borrowing money, and the first time since 2008 that the range of wholesale rates set by the Fed has been above zero.

The FOMC board of governors is expected to raise rates again, by another quarter of a percentage point, before the start of 2017.

Interest rates were slashed by Yellen’s predecessors and kept low by her because of the Fed’s dual mandate from Congress — not because of any pressure, explicit or implicit, from the White House. In 1977, Congress tasked the Fed with combating both price instability and unemployment.

Since the financial crash of 2008, the annualized rate of inflation has barely increased above 2 percent, which is the Fed’s target. Falling oil prices over the last two years have helped keep overall price-levels down (though they have also caused concerns from regulators about the stability of financial institutions with a heavy stake in the energy sector).

Unemployment, meanwhile has been stubborn since the banking crisis and the Great Recession. Joblessness only dipped below 5 percent for the first time since 2008 in January of this year

Though Trump has said before that he would replace Yellen on the grounds that she isn’t a Republican, he did previously laud her low interest rate policy.

He noted in May that higher interest rates would attract savings — a move that would cause the dollar to appreciate, putting American exports at a disadvantage.

“I love the concept of a strong dollar,” he said, according to The Wall Street Journal. “But when you look at the havoc that a strong dollar causes, and I can tell you, I have friends in China. All they do is watch the dollar. They love to see it go up.”

Trump also said then that higher rates would make it tougher for the many Americans in debt to service their obligations.

“What do we do with all the money that we owe everybody when rates go up and now all of a sudden we have to borrow at two points more?” he said.

“And we have to be very, very careful, and I am the king of debt. I do love debt. I love debt. I love playing with it. But of course, now you are talking about, you know, you’re talking about something that’s very, very fragile. And it has to be handled very, very carefully,” he said.

That did, however, itself mark a departure from comments he made in November 2015, as the WSJ noted.

Trump made remarks then more in line with his Monday musings, claiming that Yellen “should have raised the rates.”

“She’s not doing it because the Obama administration and the president doesn’t want her to,” he said.

We’re not backing down in the face of Trump’s threats.

As Donald Trump is inaugurated a second time, independent media organizations are faced with urgent mandates: Tell the truth more loudly than ever before. Do that work even as our standard modes of distribution (such as social media platforms) are being manipulated and curtailed by forces of fascist repression and ruthless capitalism. Do that work even as journalism and journalists face targeted attacks, including from the government itself. And do that work in community, never forgetting that we’re not shouting into a faceless void – we’re reaching out to real people amid a life-threatening political climate.

Our task is formidable, and it requires us to ground ourselves in our principles, remind ourselves of our utility, dig in and commit.

As a dizzying number of corporate news organizations – either through need or greed – rush to implement new ways to further monetize their content, and others acquiesce to Trump’s wishes, now is a time for movement media-makers to double down on community-first models.

At Truthout, we are reaffirming our commitments on this front: We won’t run ads or have a paywall because we believe that everyone should have access to information, and that access should exist without barriers and free of distractions from craven corporate interests. We recognize the implications for democracy when information-seekers click a link only to find the article trapped behind a paywall or buried on a page with dozens of invasive ads. The laws of capitalism dictate an unending increase in monetization, and much of the media simply follows those laws. Truthout and many of our peers are dedicating ourselves to following other paths – a commitment which feels vital in a moment when corporations are evermore overtly embedded in government.

Over 80 percent of Truthout‘s funding comes from small individual donations from our community of readers, and the remaining 20 percent comes from a handful of social justice-oriented foundations. Over a third of our total budget is supported by recurring monthly donors, many of whom give because they want to help us keep Truthout barrier-free for everyone.

You can help by giving today. Whether you can make a small monthly donation or a larger gift, Truthout only works with your support.