Trump Slams Yellen’s Fed Again, This Time on a Much Bigger Stage

  • Candidate’s criticism of low-rate policy goes unrebutted
  • Fed didn’t materialize in 2012 general-election debates

Trump: We Are in a Big Fat Ugly Bubble

Donald Trump took aim at the Federal Reserve in front of millions of viewers during the first 2016 presidential debate, accusing the U.S. central bank of playing politics in a challenge to its legitimacy that could have lasting consequences.

Public anger over Wall Street bailouts turned the Fed into a political lightning rod during the 2008 crisis, but the Republican nominee is taking that to a new level, especially by criticizing the institution during what was expected to be one of the most-watched television events in U.S. history.

“The Fed is being more political than Secretary Clinton,” Trump said during Monday night’s debate with Democratic candidate Hillary Clinton in Hempstead, New York, repeating his allegation that the central bank is leaving rates low to make President Barack Obama look good. “This Janet Yellen of the Fed” is being “political by keeping the interest rates at this level.”

While the Fed and its then-Chairman Ben Bernanke were attacked during the 2012 Republican primary campaign, that faded from view during the debates between President Barack Obama and Mitt Romney, when the central bank was never mentioned.

The Fed, under Bernanke and later Yellen, left rates near zero from the end of 2008 through December 2015 as it tried to stoke job growth in the wake of the Great Recession. The central bank raised rates late last year, but it’s delayed a follow-up increase amid overseas risks and as it waited for further evidence that the U.S. economy has healed.

‘Apocalyptic Worldview’

“Trump’s invoking the Fed tonight is his effort to wag the dog: The economy’s improvement doesn’t match his apocalyptic worldview,” said Peter Conti-Brown, a Fed historian and professor at the Wharton School of the University of Pennsylvania. “Sadly, for many Americans suspicious of the Fed, this strategy will work. It remains to be seen if it works for the majority of voters.”

Even if the Fed is holding off for legitimate economic reasons, the political spotlight is a problem for the central bank. The Fed answers to Congress, which is sensitive to public opinion.

While Clinton didn’t come to the Fed’s defense Monday night, she has previously struck back against Trump’s Fed-related comments, saying on Sept. 6 that “you should not be commenting on Fed actions when you are either running for president or you are president.”

The attacks could be a reason for concern for the Fed simply because of the venue: the debate was expected to be watched widely across the nation.

That means for a moment, many Americans who don’t follow the Fed on a regular basis heard about it in a negative light. A 2016 Gallup poll found that just 38 percent of Americans have trust in Yellen, lower than her predecessors Bernanke and Alan Greenspan -- who averaged a 65 percent confidence rating over the last five years of his chairmanship. That’s partly because fewer are familiar with her.

They’ve heard a bit more about her now.

“The day Obama goes off and he leaves and he goes off to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen,” Trump said Monday.

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