As Trump Attacks the Fed, Powell and Kudlow Remain Lunch Pals
Trump has broken with at least two decades of tradition of presidents refraining from publicly commenting on monetary policy.
(Bloomberg) -- Top White House economic adviser Larry Kudlow was suffering from back pain, and got a recommendation for a doctor from an unlikely source: Federal Reserve Chairman Jerome Powell.
The two men might be mistaken for adversaries -- Kudlow’s boss, President Donald Trump, has repeatedly castigated Powell because the Fed raised interest rates and, according to Trump, has been too slow to cut them.
Yet Powell and Kudlow remain friends and have been seen lunching together at the Fed without any aides present and away from the prying eyes of reporters, according to two people familiar with the matter who were granted anonymity to discuss it.
They have even traded medical advice and telephone numbers of doctors, one of the people said. Powell gave Kudlow the name of a back doctor. It turned out, however, that the problem was in Kudlow’s hips. That doctor referred him to another doctor, who performed a successful hip replacement, the person said.
Regular meetings between the Fed chair and top administration officials -- such as the Treasury secretary or White House economic advisers -- are common across administrations. But these are not common times.
Treasury Secretary Steven Mnuchin has kept up the tradition of regular meetings with the central bank’s chairman. Kudlow’s get-togethers with Powell, at least several of which have appeared on the chairman’s published schedules, came as he pushed for two Powell critics, Stephen Moore and Herman Cain, to get places on the Fed Board. Both later withdrew. The Fed has no role in choosing nominees.
Representatives of the Federal Reserve were not available for comment on Tuesday evening.
By expressing his frustrations with the Fed, Trump has broken with at least two decades of tradition of presidents refraining from publicly commenting on monetary policy. That has stirred a debate over whether his public criticisms of the Fed and consideration of loyal advisers for jobs there risks undermining the independence of the world’s most influential central bank.
Trump has spent months criticizing Powell for raising rates and not reversing course, most recently saying the central bank was behaving like a “stubborn child” and that Powell “blew it!” In his latest tweet on Monday, Trump reiterated his belief that if the U.S. central bank would cut interest rates, the economy would be stronger.
His pressure on Powell intensified this month. Bloomberg reported last week that the president believes he has the authority to replace Powell as Fed chairman and demote him to the level of board governor.
In a speech on Tuesday, Powell highlighted the importance of the central bank’s autonomy from political interference. “The Fed is insulated from short-term political pressures — what is often referred to as our independence,” he said. “Congress chose to insulate the Fed this way because it had seen the damage that often arises when policy bends to short-term political interests.”
Past presidents have occasionally applied pressure to lower rates. Former Chairman Paul Volcker recounted in a recent memoir that in 1984, President Ronald Reagan ordered him not to raise rates before elections. And President George H.W. Bush urged Alan Greenspan to lower interest rates in a June 1992 interview with the New York Times.
--With assistance from Christopher Condon.
To contact the reporters on this story: Jennifer Jacobs in Washington at jjacobs68@bloomberg.net;Saleha Mohsin in Washington at smohsin2@bloomberg.net
To contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, John Harney, Michael Shepard
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