President Donald Trump complained Thursday about the European Central Bank’s latest massive monetary stimulus measures, saying the easing was designed to strengthen the U.S. dollar and would hurt U.S. exports.
“They are trying, and succeeding, in depreciating the Euro against the VERY strong Dollar, hurting U.S. exports,” Trump wrote.
Asked for his comments on the president’s overt complaints about the strength of the U.S. dollar, Treasury Secretary Steven Mnuchin said: “There is a lot of validity to the things he is saying.”
“We’ve been focused on a stable dollar. That is something over the longer term, a stable dollar is important to the U.S. government,” Mnuchin said.
In Thursday mornings ECB press conference, the eurozone central bank president, Mario Draghi, responded to the tweet by Trump saying, “We do not target the exchange rate, period.”
The euro EURUSD, +0.1998% fell versus the dollar, hitting a two-year low, after the ECB pushed its key interest rate further into negative territory, announced the relaunch of its bond-buying program and took other steps to stimulate a flagging eurozone economy.
Trump also used the ECB decision to take another shot at the Federal Reserve, saying the ECB was acting quickly while the Fed was taking a more cautious approach.
On Wednesday, Trump called the Fed “boneheads” and said they should cut its benchmark rate to zero or negative.
Mnuchin said that negative interest rates might not help the euro-zone resuscitate its economy because such low rates make it much harder for banks to make a profit.
“It is very hard for banks to make money in negative interest rates and if banks can’t make money it is hard to have a good economy,” he said.
Mnuchin wouldn’t comment about whether the Fed should push for negative interest rates.
Economists said they don’t think Trump understands that negative rates are a sign of a weak economy.
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