Politics

Trump advisor Peter Navarro slams the Fed as the biggest risk to US economic growth

Key Points
  • Navarro says the Fed should pause its interest rate hikes — not because growth is slowing, but because it's strong with barely any inflation.
  • President Trump tweeted Monday that it's "incredible" the Fed is "even considering yet another interest rate hike."
  • Navarro said Trump was in good company, citing a Wall Street Journal op-ed by investor Stanley Druckenmiller and former Fed Governor Kevin Warsh.
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White House advisor Peter Navarro blames the Fed for market volatility

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.

"We have zero inflation for all practical purposes" and strong economic growth, Navarro told CNBC's Rick Santelli. "The only argument I'm hearing for the Fed to raise rates now is somehow they have to exert their independence."

There are also calls from Wall Street for the Fed to stop hiking, but for reasons in sharp 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."

Months ago, the president started pointing out that the Fed was "going too far, too fast," said Navarro, director of the White House Office of Trade and Manufacturing Policy.

Navarro said Trump was in good company on rates, citing a Wall Street Journal op-ed published over the weekend 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," Druckenmiller and Warsh contended. "We believe the U.S. economy [now] can sustain strong performance next year, but it can ill afford a major policy error."

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.

The Fed declined to comment on Navarro's interview and Trump's tweet.

WATCH the full interview with Navarro who also defended Trump's stance on China trade

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Watch CNBC's full interview with White House trade advisor Peter Navarro