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Director of the White House National Trade Council Director Peter Navarro is interviewed outside the White House August 28, 2018 in Washington, DC.
White House advisor Peter Navarro, just hours after President Donald Trump blasted the Federal Reserve, doubled down Monday, singling out the central bank as the biggest threat to U.S. economic growth.
Appearing on CNBC’s “Squawk on the Street,” Navarro said the Fed should pause its interest rate hikes — not because growth is slowing, but because growth is strong with barely any inflation. There are also calls from Wall Street for the Fed to stop hiking, but for reasons in contrast with the administration’s views, such as mounting evidence of pockets of weakness, particularly in housing.
The president, who has repeatedly slammed Fed Chairman Jerome Powell for increasing rates, tweeted Monday that it’s “incredible” that the Fed is “even considering yet another interest rate hike.”
Navarro, director of the White House Office of Trade & Manufacturing Policy, said Trump is in good company on rates, citing a Wall Street Journal op-ed from legendary investor Stanley Druckenmiller and former Fed governor Kevin Warsh. They urged central bankers to pause their “double-barreled blitz of higher interest rates and tighter liquidity.”
“The time to be more hawkish was earlier in this decade,” they argued. “We believe the U.S. economy [now] can sustain strong performance next year, but it can ill afford a major policy error,” either from the Fed or the administration.
The Fed holds its final, scheduled monetary policy meeting of the year Tuesday and Wednesday. A rate increase, which the market still expects, would be the fourth in 2018. After its September hike, central bankers projected three moves next year. The Fed will deliver an updated rate path Wednesday afternoon. Economists expect the path to be scaled back.
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