US President Trump takes aim at Federal Reserve for rates hike
Aug 23 2018
"The Federal Reserve is an independent board of governors, and they will be independent".
Since Trump took office, the Fed has raised rates five times, including twice this year under Powell.
The presidentsaid that he was told by advisers that Powell liked "cheap money" before he chose him to run the Fed, according to the Wall Street Journal. During his campaign Trump reproached the Fed for keeping interest rates low to artificially prop up the economy. A slower pace of rate increases would be meant to encourage continued borrowing and spending by companies and individuals to drive economic growth. The central bank is created to be independent from political interference.
Trump is with his own appointee, Chairman Jerome Powell, for raising interest rates and said the US central bank should do more to help him to boost the economy. "I'm not thrilled", Trump said in the interview, referring to Powell.
Unfortunately for the President that's not how it works under the Fed's mandate and while he has pledged to continue to criticise the Fed if it continues to raise rates, his criticism while unwelcome and unusual for a US President, is unlikely to stop the Fed from hiking again next month, or later this year. But higher rates make borrowing costlier and can depress stock prices. "I should be given some help by the Fed".
The pound and euro enjoyed some much-needed buying, while the yen was also up. Woolworths Group, Australia's biggest grocer, gave up 2.4 percent to extend Monday's losses after reporting a "painful" sales slowdown due to the plastic bag ban. In Venezuela at the moment, the price of a chicken is fourteen million bolivars, and the International Monetary Fund anticipates prices will increase 1 million percent in Venezuela this year.
The U.S. -China trade talks are set to begin later on Wednesday in Washington, although expectations are generally low.
US stocks fell modestly after the minutes were published while the dollar.DXY weakened against a basket of currencies. Investors will study them to see whether policymakers discussed issues such as trade policy and the shape of the US yield curve, which has come close to inverting. Some wonder whether Powell would try to perform the same magic this time if the global picture seemed to imperil the US expansion, now the second-longest on record.
Again, the impetus for the rally was driven by the United States as President Trump criticised the Federal Reserve for its interest rate guidance. Some inflation is always desirable, not least because it allows the Fed to manage economic "bumps" through the judicious use of monetary policy.
The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating.
"The Fed is going to guard its independence very, very carefully", Hurley said. "I think Powell will be less sensitive to foreign developments and more focused on the domestic economy, barring some huge crisis".