Trump urges further interest rate cuts, quantitative easing

Trump urges further interest rate cuts, quantitative easing

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Fed Chairman Jerome Powell today during his testimony before the Senate Federal Reserve Board's semiannual report to Congress 2018, (Photo ©2018 Doug Christian/TMN)
After Fed Chairman Jerome Powell gave a speech Friday morning, President Donald Trump attacked him on Twitter. (File photo ©2018 Doug Christian/TMN)

WASHINGTON – President Donald Trump on Monday called on the Federal Reserve to cut interest rates and resume quantitative easing.

Quantitative easing (QE) is when the government increases its debt portfolio in order to pump more money into the U.S. economy. It is often done through the purchase of municipal bonds and other government-backed securities.

Last Wednesday, the Dow Jones Industrial Average (DJIA) fell 800 points and the bond market signaled its first recession warning since 2007. Stocks have since recovered but that has done little to allay fears that a recession may be on the horizon.

Trump has consistently hammered the Fed and Chairman Jerome Powell for not making more aggressive decisions. Trump has denied that he is looking to replace Powell.

Last month the central bank lowered its federal funds rate from 2.25%-2.50% to 2.0-2.25%. It was first interest rate cut since 2008.

U.S. allies such Germany and New Zealand have recently made significantly more aggressive rate cuts. Some have even lowered rates to below 1%.

The Fed raised rates four times in 2018. That year the economy grew by 3.1%.

The economy grew by 2.1% in the second quarter of this year.

The national unemployment rate has stayed at 3.7% since June-a near 50-year low.

The Fed is scheduled to hold its next meeting Sep. 17-18.

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