Central Banks

Trump asks Fed for 'big cut' after Australia slashes rates on coronavirus impact

Key Points
  • The U.S. president has criticized the Federal Reserve's work on different occasions.
  • The central bank argues it takes decisions based on employment and inflation data. 
President Donald Trump speaks during a news conference on the coronavirus outbreak at the White House in Washington, February 29, 2020.
Joshua Roberts | Reuters

President Donald Trump once again called on the Federal Reserve to deliver some major monetary easing measures, after the Australian central bank cut rates to record lows and noted the impact of the coronavirus outbreak.

The Reserve Bank of Australia said Tuesday it was cutting its cash rate to 0.5% to mitigate the economic impact of the new coronavirus. Philip Lowe, the bank's governor, said the epidemic was having a "significant" hit on the country's economy.

Within hours the U.S. president responded on Twitter at 1:34 a.m. ET, saying the U.S. central bank's chairman had "called it wrong from day one."

"Australia's Central Bank cut interest rates and stated it will most likely further ease in order to make up for China's coronavirus situation and slowdown...Other countries are doing the same thing, if not more so. Our Federal Reserve has us paying higher rates than many others, when we should be paying less," Trump said.

"Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around. Should ease and cut rate big," he added.

Tweet 1

The president has regularly criticized the Federal Reserve's work, as well as Chairman Jerome Powell, believing that lower rates would boost the American economy. The bank, on the other hand, has argued it takes policy decisions based on employment and inflation data. 

As the coronavirus spreads worldwide and impacts different economies, analysts are expecting central banks to announce monetary stimulus to help with any economic hit. Goldman Sachs said Monday that the Federal Reserve is likely to take a 50 basis point cut at its March meeting. 

Powell said Friday the central bank is monitoring the coronavirus and pledged to take action if necessary. In a conference call on Tuesday, officials of the world's largest economies pledged a united front in the battle against the coronavirus scare but offered no specific actions. 

Short-term economic impact of coronavirus will be significant, strategist says
Short-term economic impact of coronavirus will be significant, strategist says