Federal Reserve signals September interest rate hike

Alicia Cross
August 23, 2018

Asian stocks were capped and the dollar dipped on Tuesday after US President Donald Trump accused China and Europe of manipulating their currencies and said he was "not thrilled" with the Federal Reserve for hiking interest rates.

In an interview with Reuters, Trump said he is "not thrilled" with Fed Chairman Jerome Powell for raising interest rates, arguing the central bank should do more to help the USA economy.

On Monday, Mr. Trump complained about the Fed chairman publicly, telling Reuters "I'm not thrilled with his raising of interest rates, no". Next time he mutters veiled threats against the Fed, some real turbulence could ensue.

Already, tighter U.S monetary policy has contributed to strain in emerging markets like Turkey, and any disruption overseas could potentially feed back into USA financial markets and ultimately the country's growth trajectory. "I'm not thrilled", Trump said in an interview with Reuters.

Since Trump took office, the Fed has raised rates five times, including twice this year under Powell.

USA stocks dipped after Trump's comments to Reuters and the dollar edged down against a basket of currencies.

"He's done this before. he's a bit of a critic of the tightening of interest rates".

With analysts expecting another United States interest rate increase in September, there is a possibility of disappointment.

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A day later, Dallas Fed President Robert Kaplan, who tends to align his views with those of Powell, released an essay that signaled he views another three or four rate hikes as "the best chance" for delivering continued economic growth, given the strength of the economy.

In the midst of a long riff on the economy, Mr. Trump said that he had expected Mr. Powell to adhere to an easy-money monetary policy, by keeping interest rates low, when he nominated Mr. Powell in November to succeed Janet L. Yellen.

Trump's remarks to the private Republican donors at Lorber's fundraiser are his most personal criticism of Powell's policies to come out thus far, Bloomberg reported. Trump nominated Powell a year ago to replace former Fed Chair Janet Yellen.

Trump has attacked the Fed for raising rates in the past.

"I am not happy about it". Trump told Reuters, referencing Powell.

"We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently, and we don't take political considerations into account", Powell said in the interview. "As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions".

After sliding to a two-year low of 15.70 last week as the Turkish crisis triggered a broad flight from emerging markets, the rand has regained some ground, advancing around 8% in the last seven days as the greenback's rally faltered.

Other reports by Free-Prsite

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