Citadel’s Griffin condemns Trump’s Federal Reserve attack
Donald Trump’s onslaught against the Federal Reserve is a political misstep that will put “he and his party in a precarious position”, Citadel founder Ken Griffin has said, in one of the most stinging rebukes from a US business luminary since the White House launched legal action against the central bank last week.
Speaking at the World Economic Forum, Griffin warned that unless the President created “more distance” from the central bank, he risked associating himself with unpopular decisions to rein in inflation or unleashing a round of inflation similar to that which lost the Democrats the last presidential election.
“You want to have a level of distance from the Fed if you’re the President in my opinion,” he told delegates. “Because you want the Fed to do the tough job of controlling inflation when need be, even when that causes a rise in unemployment and causes real pain for American households.”
Federal Reserve must make ‘unpopular decisions’
Earlier this month, it emerged that Trump’s Department of Justice was investigating the Federal Reserve over cost overruns on renovation of its Washington headquarters. Fed chair Jay Powell, who was himself the subject of a probe, revealed the action in an an unprecedented video statement in which he accused the President of waging a war on his central bank’s approach to monetary policy.
The statement triggered an almighty backlash from some quarters. Every living former Federal Reserve chair issued a joint response – alongside several ex-Treasury secretaries – condemning the move as redolent of “how monetary policy is made in emerging markets with weak institutions”. Powell’s fellow central bank chiefs also intervened, saying they stood in “full solidarity” with the Fed.
But until Griffith’s remarks, much of the US’s business community has avoided similar condemnations of Trump’s campaign.
Over several months, the President has issued regular broadsides over the Fed’s cautious approach to lowering interest rates, branding its chair “Jay ‘too late’ Powell” and calling for his resignation. The assault has also seen US prosecutors pursue Fed governor Lisa Cook in the courts on charges relating to a legacy property transaction.
“Immigration and inflation were two issues that really drove voters… in the election,” Griffin continued. “How do you control inflation? Inflation is controlled by the Fed making a politically unpopular decision to raise rates when need be, to slow or cool the economy.”
He added: “The easy money policies that I think Trump is trying to encourage the Fed to pursue, increases the risk of inflation, and I think puts both he and his party in a more precarious position.”