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Donald Trump tweeted that the Federal Reserve should lower rates to pump more money into the economy.Jonathan Ernst/Reuters

President Donald Trump, in perhaps his most unorthodox statement yet on monetary policy, called for the U.S. Federal Reserve to act as if the country was back in the throes of recession, with sharp interest rate cuts and renewed “quantitative easing” to pump trillions of dollars into the economy. As Fed officials met in Washington for their latest policy discussion, Trump on Tuesday tweeted that it would send the U.S. economy “up like a rocket if we did some lowering of rates, like one point, and some quantitative easing.”

It would also likely prove destabilizing to global and U.S. financial markets that would have to adjust to a seemingly capricious decision to cut U.S. interest rates nearly in half for no obvious reason and absorb an uncertain amount of new U.S. dollars. Much smaller, unexpected shifts in policy have led to large swings in the value of the dollar, and put developing countries and their financial institutions under stress.

The Fed’s target interest rate currently is set at a range of between 2.25 and 2.5 per cent. Reductions of a full percentage point last occurred during the onset of the 2007 to 2009 recession.

The Fed is unlikely to follow Trump’s advice. Policy-makers are expected on Wednesday to hold rates steady and to pledge to be “patient” in deciding on any future rate changes. The Fed is also likely to allow the central bank’s asset holdings to continue to shrink – not expand as they would under quantitative easing. Many Republicans, and Trump himself, were critical of quantitative easing when it was introduced during the recession, suggesting it was likely to cause inflation.

But the remarks do show the ongoing tension between the White House and the Fed, even though four of the current five members of the central bank’s board of governors were chosen for their jobs by Trump. In recent weeks his efforts to name more overtly partisan supporters to the Fed have run into opposition from Republicans on Capitol Hill, prompting potential nominee Herman Cain to withdraw from consideration and leaving potential nominee Stephen Moore’s fate in doubt.

Trump’s anger at the Fed comes despite recent data showing the economy continuing to grow, and despite the fact that equity markets have regained much of their value since a sharp drop last fall. Trump blamed that sell-off on the Fed’s December rate increase, its fourth of the year, and in effect has asked the Fed to take back all of its rate changes since 2017.

Current growth of 3.2 per cent is “doing very well...but with our wonderfully low inflation, we could be setting major records,” Trump said in a tweet.

Trump’s criticism of the Fed was prefaced by some admiring comments about China, where, unlike the United States, the central bank is not insulated from the government’s immediate demands.

“China is adding great stimulus to its economy while at the same time keeping interest rates low,” Trump said, referring to steps China took in recent months to fight a sharp economic slowdown.