Trump’s Feud With the Federal Reserve Will Hit Your Pocketbook

When the Fed sets higher interest rates, banks tend to not make as many loans—and they’re more “picky” about whose loans they approve, said Ellen Meade, a research professor of economics at Duke University. This will slow the economy.

“Similarly, if the economy is looking like it’s not doing so well, or it’s in recession, the Fed will lower interest rates, and that’ll make borrowing less expensive. And banks will do more of it, but they have to do more of it in order for the economy to improve,” said Meade, who previously served as a special adviser to the Federal Reserve Board of Governors.

In the wake of the economic upheaval spurred by the coronavirus pandemic, the Fed has been working to lower the rate of inflation, and has done so by raising interest rates. Late last year, the Fed lowered interest rates, but it has kept them steady in the months since—and therein lies the issue for Trump.