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Donald Trump has continued his recent attacks of Janet Yellen and the Federal Reserve.
Asked about Fed policy by CNBC’s Becky Quick in an interview Monday morning, the Republican presidential nominee suggested that the Fed, which is expected to be politically independent, was actually maintaining record-low interest rates until President Barack Obama is out of office.
Trump said Yellen was keeping interest rates “artificially low to get Obama retired,” adding, “watch what’s going to happen afterwards – it’s a very serious problem.”
Trump also suggested that the Department of Justice and the FBI were not politically independent from the Obama administration.
“I used to think that the Justice Department was independent also, and I used to think the FBI was independent,” Trump said. “But that’s obviously not possible because Hillary Clinton is guilty as hell – any third-rate lawyer will tell you that. All you have to do is read and watch. So I used to think they were independent, and the Fed is obviously not independent. It’s obviously not even close to being independent.”
Trump also expressed skepticism over the Fed’s policy of ultra-low interest rates, echoing his statements from last week that the current expansion of debt was going to come back to bite the US economy.
“I would want to have a policy where we can begin to gently reduce debt, because right now it is not under control,” Trump said. “What happens if interest rates go up fairly substantially? What happens with all of the money we have and we are borrowing – you know what that does to our balance sheet? I mean that’s a cost that’s beyond belief.”
Trump also expressed concern over what would happen if interest rates returned to their level from the 1970s, saying it would hurt businesses and Americans who had taken on debt assuming interest rates would stay low.
“It’s like the baseball players – they go out and have a good season and they think it is going to happen again,” Trump said. “That’s what we’re doing. We’re living like we’re going to have no interest because they’re so low.”
To be fair, the federal funds rate peaked in 1981 at 19.1% and is now in a range of 0.25% to 0.50%. Additionally, the Fed and Yellen have been reluctant to move it upward at a fast pace, so the idea that it would suddenly return to the 1981 high is doubtful.
In the interview, Trump also said Sen. Elizabeth Warren of Massachusetts was wrong in wanting to keep interest rates low, calling the Democratic Senator “the least effective” member of the Senate.
The Fed’s next meeting to decide monetary policy is September 20-21. The market today sees only a 30% chance of an interest-rate hike at that meeting.
Check out the full exchange below.
— CNBC Now (@CNBCnow) September12, 2016