WASHINGTON – President Donald Trump on Monday called on the Federal Reserve to cut interest rates and resume quantitative easing.
…..The Fed Rate, over a fairly short period of time, should be reduced by at least 100 basis points, with perhaps some quantitative easing as well. If that happened, our Economy would be even better, and the World Economy would be greatly and quickly enhanced-good for everyone!
— Donald J. Trump (@realDonaldTrump) August 19, 2019
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.