Donald Trump Attacks Federal Reserve, Yellen During Debate
27 September 2016 - 4:55AM
Dow Jones News
By Harriet Torry
Republican presidential nominee Donald Trump redoubled his
attack on the Federal Reserve and its chairwoman, Janet Yellen,
accusing the central bank of "doing political things" by keeping
interest rates low.
"When they raise interest rates, you're going to see some very
bad things happen, because they're not doing their job," Mr. Trump
said during a debate with Democratic presidential nominee Hillary
Clinton, accusing the Federal Reserve of being "more political"
than his rival.
Mrs. Clinton didn't comment on Mr. Trump's remarks about the
Fed. But she has previously described it as inappropriate for
candidates and presidents to weigh in on Fed actions.
Ms. Yellen last week denied that the Fed takes politics into
account in its decision making. "I can say, emphatically, that
partisan politics plays no role in our decisions about the
appropriate stance of monetary policy," she said during a press
conference after the Fed's policy meeting, at which it decided to
leave rates unchanged.
Mr. Trump also said the U.S. economy is in a "big, fat, ugly
bubble," and warned of a stock market crash when borrowing costs
rise. Mr. Trump's concerns about bubbles are shared by some
economists, including at the Fed. Some Fed officials have said that
putting off a rate increase could spark dangerous asset bubbles
that could destabilize the financial system. Low interest rates
reduce returns for savers, pushing investors to seek higher returns
in other -- potentially more risky -- financial investments.
The Fed pushed short-term interest rates down to near zero in
2008 during the financial crisis and held them there until last
December. The central bank raised them up a quarter percentage
point then and hasn't touched them since. Last week, it held
short-term interest rates in a range between 0.25% and 0.50% but
signaled it still expected to raise them before year-end.
Mr. Trump has taken aim at the Fed on several occasions
recently, accusing Ms. Yellen of creating a "false economy" by
keeping interest rates low to help President Barack Obama.
He also has praised Ms. Yellen, saying just four months ago that
he had "great respect" for her and he warned that raising rates
"would be a disaster."
Write to Harriet Torry at harriet.torry@wsj.com
(END) Dow Jones Newswires
September 26, 2016 23:40 ET (03:40 GMT)
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