Trump rips Fed again for hiking interest rates

Galtero Lara
Julio 20, 2018

So the Fed's rate hikes have lit a fire under the US dollar, something which tends to widen the country's trade deficit as foreign countries with weaker currencies become much cheaper to import from.

Trump's assertions, made in a series of morning tweets, came a day after he broke with decades of traditional White House silence on Federal Reserve decisions, criticizing the nation's independent central bank for raising interest rates during a television interview.

USA central bankers project two more interest rate increases this year and another three in 2019.

Doing so slows growth, as it raises the cost of borrowing, but can also prevent the economy from overheating and tipping into recession. After keeping rates at near zero for years, the Fed has hiked its benchmark interest rate seven times since 2015, and more are planned because the US economy is heating up.

The Fed had no comment. Then, his complaint was that interest rates were too low.

The Fed's dual mandate is to maximize employment and stabilize prices.

Hoping to keep a lid on inflation as the world's largest economy gathers pace, the Fed has raised its benchmark lending rate seven times since 2015 and expects two more rate hikes this year.

That policy drew rebukes from many Republican lawmakers at the time, but the Fed proceeded with its plan regardless.

Trump nominated Powell as Fed chairman previous year to replace Janet Yellen.

It wasn't the first time in history the Fed has faced pressure from a USA president.

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The US imported $505 billion worth of goods from China in 2017, according to Census Bureau data.

"Following falls in United States shares and ahead of the weekend, sales for position-adjustment reasons are seen overwhelming the market", SBI Securities said in a commentary. "I really like President Xi a lot".

The reaction to Trump's remarks in the financial markets was muted.

After he posted the tweet, the U.S. Dollar Index fell slightly.

In excerpts of an interview with United States television network CNBC aired Thursday, Trump said a strong dollar "puts us at a disadvantage", adding that the Chinese yuan "has been dropping like a rock".

President Trump departs after speaking at a "Pledge to America's Workers" event in the East Room of the White House on Thursday. "I want them to do well", he said of China.

Trump's remarks immediately raised questions about Trump's commitment to the Fed's political independence, a key pillar of the central bank's function.

"I am not pleased", said Carl Tannenbaum, a former Chicago Fed official and chief economist at Northern Trust.

Trump tapped Powell, who had served as a governor at the US central bank, to serve at its helm following Janet Yellen.

"This is such a risky thing for the Fed, and for the president, and for central bank independence", said Peter Conti-Brown, a Fed historian at the University of Pennsylvania's Wharton School.

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