Trump Says Fed’s Warsh Faces Board That’s a ‘Bit Hostile’

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(Bloomberg) — President Donald Trump said Federal Reserve Chairman Kevin Warsh may not be able to compel his colleagues on the central bank to do what the new chair wants on monetary policy.

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“He’s got a board that maybe is a little bit hostile, and you know, unfortunately, and maybe a board that wants to do the wrong thing,” Trump said in an interview with CNBC on Thursday.

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The comments appeared to give Warsh some leeway on interest rates, after Trump spent months hectoring his predecessor, Jerome Powell, to cut rates.

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Trump’s comments came in response to a question about a jobs report earlier Thursday that showed US hiring slowed sharply in June. Trump was asked if the mixed report gave Warsh more flexibility when it came to cutting rates — something the president has pushed for aggressively.

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“He’s a great guy and a great pro, and I know where he’d like to be, but he has to do what he has to do,” Trump added.

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Thursday’s jobs report curbed some of the momentum in job growth seen this year. The unemployment rate fell to 4.2% as labor force participation shrank.

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Following Thursday’s jobs report, investors scaled back bets on an interest-rate increase this year. While Trump has long called for interest rate cuts, Warsh has emphasized the central bank’s independence in determining monetary policy.

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The president also reiterated he plans to continue to seek the removal of Fed Governor Lisa Cook following a Supreme Court decision that allowed her to stay in her post while she challenges the administration’s efforts to oust her.

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“They sent it back, not based on the merits, they send it back on process and procedure. So we’ll start the process and we’ll do perfect process and perfect procedure,” Trump said.

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The justices in a ruling earlier this week voted 5-4 to allow Cook to stay in her job while she fights Trump’s bid to remove her over unproven mortgage fraud allegations. The justices faulted Trump for not giving Cook notice and a chance to be heard before trying to remove her. But the court stopped short of saying whether the allegations against Cook, if true, would be sufficient grounds for removing her in the midst of her 14-year term.

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The administration has accused Cook of fraudulently listing homes in Michigan and Georgia as her “primary residence” to secure more favorable terms on loans. Cook has called the claims baseless.

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Trump critics have cast his efforts to oust Cook, as well as his administration’s scrutiny of the Fed over building renovation expenses and the president’s own frequent criticism of Powell, as part of a concerted effort to influence the central bank on monetary policy. 

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Warsh in his confirmation hearings had said he would protect the Fed’s independence in his role as chair.

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On Wednesday, Warsh said price risks have come down in recent weeks and repeated his commitment to bringing inflation down to the Fed’s 2% target.