【By Guo Tan, Observer Net】On January 31 local time, U.S. President Trump joked at a dinner in Washington that if the person he nominated as the new Federal Reserve chairman, Kevin Warsh, did not cut interest rates, he would sue him.
According to a report by The Wall Street Journal, this was the first time Trump, in his capacity as president, attended the exclusive "Alfalfa Club" dinner, where he was the special speaker.
Attendees also included former U.S. President George W. Bush, Chief Justice of the Supreme Court John Roberts, Republican Senator McConnell of Kentucky, Amazon founder Bezos, current Federal Reserve Chair Powell, Warsh himself, and several current and former members of Congress.
According to people present at the dinner, Trump told business leaders and Washington elites that he chose Warsh because he looked like the ideal candidate for the position.
He joked that if Warsh didn't lower interest rates, he would sue him.
Kevin Warsh IC Photo
Later that day, when asked about the remarks on Air Force One, Trump said, "It was just a joke at the dinner." He stated that he had not asked Warsh for any commitments regarding the nomination, and said, "I could have done it, but I didn't."
Powell's term as Federal Reserve chair will end in mid-May, and Trump has long pressured Powell to cut interest rates and criticized him repeatedly.
Trump had already nominated Warsh as the new chair on January 30, and the nomination still needs to be approved by the Senate. At 55 years old, Warsh previously served as a Federal Reserve governor, worked as an economic advisor in the Bush administration, and worked at Morgan Stanley as an investment banker.
The Financial Times reported that Warsh's nomination has sparked renewed scrutiny of the Federal Reserve's role.
The Federal Reserve chair should remain independent of the president's personal wishes, but some prominent former central bank officials, such as Raghuram Rajan, former governor of the Reserve Bank of India and professor at the University of Chicago, believe that the Federal Reserve may have overstepped into the authority of the Treasury and Congress.
Rajan told the Financial Times, "How long can this situation continue, where the government needs massive financing and the Federal Reserve is buying large amounts of U.S. Treasury bonds, yet this operation can still be falsely called monetary policy rather than fiscal financing?"
Bloomberg analysis suggests that Warsh being named as a Federal Reserve chair candidate does not necessarily mean the Fed's policies will change. The Fed's benchmark interest rate is determined by a majority vote of the 12-member Federal Open Market Committee, which consists of seven Federal Reserve governors and five presidents selected from the 12 regional Federal Reserve Banks.
To prevent an unexpected sharp slowdown in the U.S. labor market, the Fed cut interest rates three times last year. In December, Trump told The Wall Street Journal that he believed interest rates should be lowered to 1% or even lower.
This week, the Fed kept the interest rate range unchanged at 3.5% to 3.75%, which is significantly higher than the target Trump hoped for. Afterward, Trump launched a fierce attack on Powell, calling him "destroying our country and national security" on social media and referring to the Fed chairman as a "moron."
According to people present at the dinner, Trump also mentioned the possibility of bombing Iran again during his speech. Later on Air Force One, Trump said that Iran was in contact with the U.S. and hinted that an agreement might be reached to avoid military strikes.
People at the scene also said that during his speech, Trump saw Chief Justice Roberts present and stated he wouldn't make jokes about him because he needed to "kiss his ass."
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Original: toutiao.com/article/7601809570700198452/
Statement: This article represents the personal views of the author.