President Donald Trump’s emphatic criticism of the Federal Reserve’s interest rate actions really aren’t so different from what his other recent predecessors have done, former central bank Chairman Alan Greenspan told CNBC on Thursday.
Asked if he ever received input from any of the four presidents under whom he served, Greenspan said it happened “all the time.”
“You’ll find every president has an insight into how the markets work and where interest ought to be, which is always superior to that of the Federal Open Market Committee,” he said in an interview on “Squawk Box.”
Greenspan served as chairman from 1987-2006 under Presidents Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush.
During that period, he earned a reputation as the “Maestro” who helped orchestrate the U.S. economy through some rapidly changing economic times, from the Reagan boom through the days just before the financial crisis that exploded under the latter Bush administration.
He said he learned that it’s best to try to ignore the outside political pressure and focus on doing the job. The Fed has raised its benchmark interest rate six times since Trump took office.
“The best thing that you can do if you’re in the Fed is put earmuffs on and just don’t listen,” Greenspan said. “I was at the Fed for 18½ years. I got innumerable notes, pledges, requests, et cetera to lower rates. I do not recall a single instance where somebody in the political realm said we need to raise rates, they’re too low.”
Current Chairman Jerome Powell has faced a barrage of opinions from Trump, who has called Fed officials “crazy” has said he is “not happy” with the rising rates. Most recently, he deemed the central bank’s policy the biggest danger to the economic boom that has happened during his administration.
The very public nature of Trump’s critique is what sets it apart from many other previous Oval Office occupants.
But Greenspan said he is confident Powell can handle it.
“Jay Powell is a first rate Federal Reserve chairman,” he said. “This guy knows what he’s doing. I’ve known him for years. He’s extremely competent. His competence is such that I don’t worry about where the Fed’s going.”