Federal Reserve chair Jay Powell says the trade war Donald Trump has started with China has made it hard for the U.S. central bank to do its job, an accusation that was met with a angry tweet-storm by the U.S. president.
Speaking at an economic retreat in Jackson Hole, Wyoming, on Friday, Powell said there’s increasing evidence of a global economic slowdown and suggested that uncertainty from Trump’s trade wars has contributed to it.
“Trade policy uncertainty seems to be playing a role in the global slowdown and in weak manufacturing and capital spending in the United States,” Powell said in his speech.
The U.S. central bank cut its benchmark interest rate for the first time in a decade earlier this month, an indicator that it feels less confident in the prospects for the economy.
The U.S. president has welcomed that move and is trying to push the Fed to cut rates even more, but so far the Fed has publicly tried to maintain its independence.
Trump reacted angrily to Powell’s speech, tweeting shortly after it ended that the central bank is “very weak” and shouldn’t be speaking without consulting him first. He also seemed to accuse Powell of being an “enemy” of the U.S.
….My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?
Trump’s tweet-storm prompted a sell-off on the stock market, as investors who had initially liked the sound of Powell’s speech quickly sold off shares as the rhetoric ratcheted up.
Trump went on to “hereby order” U.S. companies to seek alternative markets to China, which announced a new round of tariffs against American goods earlier Friday.
The Dow Jones Industrial Average lost nearly 500 points, after having earlier been slightly higher.
Trump also promised he would have more to say in response to Chinese tariffs later on Friday.