US President Trump takes aim at Federal Reserve for rates hike

Alicia Cross
August 22, 2018

The dollar fell versus the euro and pound on Tuesday (Aug 21) after US President Donald Trump hit out at the Federal Reserve's interest rate rises, accusing it of not backing his economic plan, while most equity markets climbed looking ahead to China-US trade talks.

The dollar was under further pressure today after President Trump criticised the Federal Reserve and threatened to deepen his trade dispute with China.

The Fed has been gradually raising interest rates since the end of 2015, with five hikes coming under Trump.

On inflation, no big surprises are expected: the central bank will likely reiterate that the monetary policy will remain "accommodative" as inflation continues progressing toward Fed's 2.0% target, with fluctuating levels around it not being a big concern at the time being.

Kohn said he didn't think Powell or the Fed would change their course because of Trump's remarks.

The president spooked investors in July when he criticized the USA central bank over tightening monetary policy.

The greenback slipped for a fourth day and drove the euro above the key $1.15 level amid thin summer liquidity, after Trump was said to have lamented rising borrowing costs and complained that Jerome Powell hasn't proved to be a cheap-money Fed chairman.

Trump, who also criticized the Fed as a candidate for president in 2016, said other countries benefited from their central banks' moves during tough trade talks, but the United States was not getting support from the Fed.

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Powell also told Scott, according to the lawmaker, "that the president has not weighed in with him at all on interest rates whatsoever, or on any role the Fed has".

The benchmark US interest rate, which plays a large role in setting borrowing costs for mortgages, credit cards, small businesses and auto loans, has roughly tripled since Trump was sworn into office past year.

"Am I happy with my choice?"

Mr. Trump's comments about Mr. Powell were first reported by Bloomberg.

A Fed spokesperson declined to comment. Most right-leaning economists and lawmakers say keeping rates low could risk rampant inflation and financial market bubbles.

"What Trump is anxious about is that the Fed has, in my own words, growth phobia", Stephen Moore, a Republican economic commentator who advised Mr. Trump during the 2016 presidential campaign, told the Wall Street Journal.

In addition to picking Powell as Fed chair, Trump has appointed one other board member, Randal Quarles, and has nominated three others to the panel, two of whom are expected to be confirmed soon by the Senate. "You know, a lot of people beat up on the Fed".

Other reports by Free-Prsite

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