White House senior counselor Peter Navarro appeared on Newsmax on Tuesday, calling for the Federal Reserve's Board of Governors to bypass Chair Jerome Powell and vote independently to lower interest rates, accusing Powell of repeated policy failures that he said have consistently harmed the U.S. economy.
Navarro, senior counselor for trade and manufacturing, said the U.S. is falling behind global economic trends and warning of a return to 1970s-style stagflation if rates remain too high.
In an interview on "Rob Schmitt Tonight" from the White House, Navarro addressed concerns over inflation, which rose to 2.7% in June from 2.4% in May.
When asked if the numbers validated Powell's cautious approach, he said, "No, not at all. It was below expectations, which I think is the key figure. I think what we're seeing here is with the energy sector — in particular with oil prices — that helps pull down prices everywhere else."
Navarro criticized the Federal Reserve's current rate policy as overly restrictive.
"We definitely believe the Federal Reserve is at least 50 to 100 basis points behind the curve," he said. "If you look at where interest rates are and the rest of the world, we're clearly the ones who are the holdout in terms of lowering things."
He also cautioned against repeating the economic mistakes of the past.
"We watched this carefully. The last thing we want is a stagflationary event like the '70s. But this was a good number in that it was below expectations. And we're just going to keep moving forward.
"I think the best-case scenario for America is for the Board of Governors — the rest of them — to take the decision out of Jay Powell's hands," Navarro said.
"He has no clue about Trumponomics. In the first administration, he made a severe policy error underestimating the ability of tax cuts, deregulation, strategic energy dominance, and fair trade to stimulate growth without stimulating inflation."
According to Navarro, Powell's early rate hikes during the first Trump administration stunted economic growth.
"He raised rates too fast then, and that cost us a point of GDP [gross domestic product] growth, which is huge. I mean, that's like almost a million jobs that weren't created because of him.
"He's doing it again," Navarro continued. "You've got to wonder at this point, Rob, whether it's out of stupidity or spite or both. He clearly doesn't like the president. He clearly sucked up to [former President] Joe Biden to get reappointed."
Navarro blamed Powell for not speaking up during what he called "fiscally irresponsible" spending under the previous administration.
"It is the responsibility — make no mistake about this — it's the responsibility of the Fed chair to speak up rather than simply accommodate fiscal irresponsibility with his mouth closed."
He concluded: "Powell has made three major blunders, and it's time for the Board of Governors to have a little revolution there. They can vote to cut rates. They don't have to wait for Jay Powell's lead."
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Jim Thomas ✉
Jim Thomas is a writer based in Indiana. He holds a bachelor's degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.