The Fed Made a Big Mistake Raising Rates, Trump Says

President Donald Trump on Monday blasted the Federal Reserve’s monetary policy.

“They made a big mistake. They raised interest rates far too fast,” Trump said in a phone interview with CNBC’s “Squawk Box.”

Trump began criticizing the Fed last year, saying the central bank’s policy of raising interest rates was hurting his administration’s attempts to accelerate economic growth. This prompted criticism from many economists and journalists who said that Trump’s criticism broke with tradition and threatened the independence of the Fed. In fact, however, many presidents–including Ronald Reagan–have criticized the central bank.

The Fed raised interest rates four times last year, most recently in December. When Trump began criticizing the Fed, the central bank was projecting it would raise rates three times in 2019. At its December meeting, it was projecting two hikes for this year.

In  January, however, the Fed changed its policy from one of gradual rate increases to one of patience. Market indicators now suggest that investors believe that Fed will cut rates multiple times this year, an indicator that the market now agrees with Trump’s criticism of the Fed. In interviews and speeches, Fed officials have declined to push back against those market expectations, indicating that they too expect to cut rates this year.

Trump indicated that it is not just higher rates that are a problem but also the Fed’s reversal of its balance sheet expansion that is causing the economy to slow.

“They did quantitative tightening. They were taking in $50 billion a month–$50 billion a month. And they’ve now eased that but it’s still $25 billion a month, which is ridiculous,” Trump said.

Trump contrasted the Fed’s approach with that of China, which has been expanding credit in an effort to maintain its growth amid the trade policy.

“Now China is doing just the opposite. They’re pumping money in. So I’m winning but I’m not winning on a level table,” Trump said. “They devalue, they loosen, or you would just say they pump a lot of money into China and it nullifies—to an extent, not fully—the tariffs.”