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White House economic adviser Larry Kudlow lashed out at Bill Dudley, after the former president of the New York Federal Reserve wrote that the central bank should avoid cutting interest rates to soften the economic impact of President Donald Trump’s trade war with China.
Kudlow, speaking to Bloomberg Television’s Jonathan Ferro on Friday, said Dudley was politicizing the independent Fed and that the president’s own frequent comments disparaging Fed Chairman Jerome Powell’s performance didn’t amount to the same interference.
“With respect to Bill Dudley, whom I have known for many years, Bill Dudley went over the cliff,” Kudlow said. “That is the most politicized statement I have ever heard.”
Dudley sparked swift criticism after writing a Bloomberg Opinion column on Aug. 27 suggesting that the Fed reject interest-rate cuts that would help Trump’s prospects for re-election in 2020. Dudley argued the central bank would risk enabling further escalation by the president in the trade war with China and said that officials should state explicitly that they “won’t bail out an administration that keeps making bad choices on trade policy.”
Dudley posted a follow-up piece on Sept. 4 to clarify his views. In it, he said he didn’t believe the Fed should conduct monetary policy with an eye on influencing the 2020presidential election, and that the Fed should never be motivated by political considerations.
Kudlow responded at length to Dudley’s initial op-ed, and the follow-up piece, saying the comments were “utter nonsense” and a “new low.”
“I’ve never seen anything like the Dudley statement,” Kudlow said. “There is no excuse or defense for it.”
Kudlow said his own conversations made clear that the Fed board was “horrified” by Dudley’s op-ed. Trump has regularly criticized the Fed, called for lower rates and lamented being stuck with Powell. Earlier Friday, Trump tweeted: “Where did I find this guy Jerome? Oh well, you can’t win them all!”
Kudlow said he believed that rate cuts are coming.
“The market is telling us the Fed’s going to lower rates in September and October. I think that’s a good thing,” Kudlow said. “In any event, the Fed is professional, they are independent, they’re going to do what I think they need to do, and that’s going to help the economy.” Fed officials meet Sept. 17-18 in Washington and investors have fully priced another quarter percentage point cut following their rate easing on July 31.
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