Trump 'Not Thrilled' with Fed Chairman Powell Over Rate Hikes

22 August, 2018, 06:54 | Author: Regina Silva
  • Trump 'Not Thrilled' with Fed Chairman Powell Over Rate Hikes

FILE PHOTO: U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017.

Meanwhile, Trump also said he did not expect much progress from trade talks with China this week in Washington.

"I asked him specifically about the independence of the Fed, and he reinforced the fact that their goal is to [address] unemployment, our economy, and that is their only objective", Scott (R-S.C.) said in an interview.

In his interview, Trump accused the European Union and China of manipulating their currencies, adding that Beijing was weakening the yuan to offset the effects of USA tariffs.

In July, Trump said he was "not thrilled" with the rate increases.

"This is helping Treasury prices to go out at the highs late today". This should push USA five-year and 10-year yields to go below levels which have held since June. The narrow gap between long-term and short-term Treasury yields shows investors see slower growth ahead, he said, and also suggest the USA economy is in the late stages of an economic expansion that looks headed to be one of the longest in history.

Trump told Reuters that he was "not thrilled" with Powell, who he appointed to lead the Fed and that the bank should do "what's good for the country" by holding off on rate hikes.

The Fed is expected to raise rates twice more this year. I doubt these comments move the needle for Powell and his colleagues, but it certainly sends a strong signal to those candidates interested in vying for one of the Fed Board's many open seats: "favor easy money policy or find another job".

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Kaplan said he expects the USA economy to grow 3 percent this year but to slow next year as the effects of tax cuts fade. By nearly any matrix that can be used, they are succeeding.

"The Fed keeps calling for raising rates in a return to "normalcy.' I would argue, with all of the central bank intervention, here and overseas, that there was been no 'normalcy" for nearly a decade".

Beyond criticizing the Fed for raising rates, there's little Trump can do about it.

"Raising rates just slows the economy down". So what we have here is the president and the Congress trying to expand the economy while the central bank of the United States is going in exactly the opposite direction.

In developed economies, central banks are independent of political control.

Most policymakers believe the Fed can not raise rates much beyond 2.9 percent, a level they see as "neutral" for the economy, without borrowing costs really beginning to drag on growth.

STOCKS - The S&P 500 .SPX pulled back from a session high just before the 4 p.m. close following the news. The index closed up 0.24 percent. The benchmark rate is now in a range of 1.75 per cent to 2 per cent, and the Fed has indicated it is likely to hikes rates two more times before the end of the year.

The dollar index, which measures the greenback against a basket of six major peers, was down 0.4 percent at 95.494.

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