Don’t help Trump with cut, Fed told

The US Federal Reserve has been told not to react to President Donald Trump’s trade war by cutting interest­ rates.

Former president of the Federal Reserve Bank of New York Williaml Dudley. Picture: AFP.

The US Federal Reserve should not react to President Donald Trump’s trade war by cutting interest­ rates and should make him bear the risk at the ballot box, says a former vice-­chairman of its rate-setting ­committee.

The re-election of Mr Trump would threaten the US and global economy and the Federal ­Reserve’s independence, William Dudley said. Current and former Fed officials generally refrain from commenting on politics, but his comments come weeks after the four surviving former chairmen of the central bank warned, without naming Mr Trump, that sustained political attacks on the Fed would hurt the US.

Mr Dudley, president of the New York Federal Reserve until last year, was more forthright.

“Central bank officials face a choice: enable the Trump administration to continue down a ­disastrous path of trade war ­escalation, or send a clear signal that if the administration does so, the President, not the Fed, will bear the risks — including the risk of losing the next election,” he said in an opinion piece for ­Bloomberg.

“There’s even an argument that the election itself falls within the Fed’s purview.

“After all, Trump’s re-election arguably presents a threat to the US and global economy, to the Fed’s independence and its ability to achieve its employment and inflatio­n objectives.”

A spokeswoman for the Federal­ Reserve said that its decisio­ns were guided by its mandate­ “to maintain price stability and maximum employment. Political considerations play absolute­ly no role.”

The Times