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Trump Says the Fed Is His ‘Biggest Threat.’ What’s He So Afraid of?

Treasury Secretary Steven Mnuchin Speaks At Meeting Of The Financial Stability Oversight CouncilTreasury Secretary Steven Mnuchin Speaks At Meeting Of The Financial Stability Oversight Council
Federal Reserve Chairman Jerome Powell listens during a Financial Stability Oversight Council meeting October 16, 2018 at the Treasury Department in Washington DC. Alex Wong—Getty Images

It’s not China, it’s not Russia, and it’s not the Democratic Party or pesky journalists. U.S. President Donald Trump says the biggest menace to his administration is the U.S. Federal Reserve.

In an interview with Fox Business Network Tuesday, Trump continued his on-going criticism of the Fed for its interest rate increases, which he thinks are slowing the economy. “My biggest threat is the Fed,” he said.

The Fed has raised interest rates six times during the Trump administration, three of those times under current Fed chief Jerome Powell, who was nominated by Trump. “I’m not happy with what he’s doing because it’s going too fast,” Trump said.

Interest rate increases ripple through the economy, making loans more expensive for businesses and consumers and thereby slowing investment and spending. Raising rates is the Fed’s way of lowering the risk of runaway inflation, which happens when competition for labor and a shortage of goods in a fast-growing economy leads to big increases in wages and prices. Right now, however, inflation rates are unusually low for an economy with such a low unemployment rate. Earlier this month, Powell said it was “a reasonable question” when a journalist asked if the economy was too good to be true.

U.S. Treasury Secretary Steven Mnuchin has said that Trump respects the independence of the Fed despite even though he prefers low interest rates, the Associated Press reports. The central bank is nominally independent of the executive branch, though U.S. presidents appoint the bankers to their posts. Trump denied having direct contact with Powell since nominating him.

Presidents can only remove a Fed board member “for cause” beyond policy disagreements.