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President Trump's complaints on the Federal Reserve raising rates have found the support of an unlikely alley: Paul McCulley, former PIMCO chief economist, who told CNBC the President is right to voice his opposition to the central bank's actions.
"I don't have any problem with the President speaking on monetary policy. I think there has been too much of this hidden rule that the President is not supposed to speak on monetary policy," said McCulley. "Monetary policy deals directly with growth, unemployment and inflation and those are issues that Presidents win elections or lose elections on. I think we should lift that veil of silence and I have no problem with that. I wish our President was more articulate and less quite frankly uncouth in how he does it."
McCulley told CNBC's Power Lunch the President is not wrong because he won an election based on the will of the people who also wanted an economy growing at 3 to 4 percent.
"I don't think Mr. Trump is necessarily wrong when he says the Fed is a threat. I think the threat is to his re-election," McCulley said on CNBC's "Power Lunch. " "There are two more years to go and the Fed has more tightening it plans to do so the critical thing for the president politically is that he got into office because of the vote of the uneducated, the working class, non-college and they are finally participating in the economic recovery and the trickle down finally has gotten down to his base. And the notion the Fed is going to throw ice cubes in the punch bowl just when his base is arriving to the party understandably frightens him."
"He wants to see trickle down and he is a trickle down guy get all the way to the bottom of the economic distribution and he's afraid I think justifiably so that the Fed might say that's a little bit too hot to run the economy because we are running pretty hot right now."
From the lens of the law, McCulley said the notion of a less independent Fed is something to talk about.
"I think the Fed has become too powerful. In some respects it had no choice because other arms of the government couldn't handle things in an efficient sort of way," explained McCulley. "But I think the essential issue of what is full employment, what is your potential growth rate, what is your inflation target, those are goals. I think there should be more involvement with congress and the executive branch in sharing those goals. I am a big believer in Fed independence operationally. Day to Day, but in goals setting I think they should share the responsibility… They need to morph."
The Trump versus Fed scenario was not unexpected to McCulley. He forecasted such a battle with President Trump in one of his YouTube videos 18 months ago.