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

24 August, 2018, 04:16 | Author: Teresa Adams
  • Drew Angerer  Getty Images President Donald Trump and Federal Reserve Chair Jerome Powell

Trump is with his own appointee, Chairman Jerome Powell, for raising interest rates and said the USA central bank should do more to help him to boost the economy. "There is little indication that he will accede to any demands from President Trump to halt monetary tightening", he added.

The benchmark U.S. interest rate, which plays a large role in setting borrowing costs for mortgages, credit cards, small business and auto loans, was set at a range of 0.5 per cent to 0.75 per cent when Trump was sworn in.

The Federal Reserve operates independently of the government, as it is sometimes compelled to make interest-rate decisions that are meant to be good for the economy in the long run but that may be politically unpopular. "And I think the euro is being manipulated also", Trump said.

Trump has made reducing U.S. trade deficits a priority and the combination of rising interest rates and a strengthening dollar pose risks for export growth.

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The Fed has raised interest rates twice this year and is expected to do so again next month with consumer price inflation rising to 2.9 per cent in July, its highest level in six years, and unemployment at 3.9 per cent, the lowest level in about 20 years. "I'm not thrilled", Trump said in an interview with Reuters.

This would not be Trump's first criticism of Powell and the Fed.

Atlanta Fed President Raphael Bostic said on Monday he was maintaining his expectation for one more interest rate hike this year, as trade tensions and global events add some downside risk to an otherwise strong United States outlook. He urged the Fed to avoid doing anything that could slow economic growth.

In currencies, the dollar came under pressure after Trump reiterated his displeasure at the Fed's rate hikes, saying the central bank should do more to help him boost the USA economy. "And to the extent it becomes politicized, like unfortunately so many other things around here have over the a year ago and a half, that would be a very negative place for our country to go", Corker said.

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While the immediate market reaction was not dramatic, the developments present further uncertainty over Trump's leadership for investors to navigate. Presidents have not commented on Federal Reserve policy in over twenty years after Bill Clinton chose to stay mum on the central bank's choices.

"Well, the Fed was set up to be independent from politics as much as you can be in Washington, from the whims of the moment, whether it's the president or whether it's the Congress", Shelby said.

"I'm very concerned, especially given this very divisive and highly politicised environment, that bringing the Fed into that environment could complicate the Fed's communications [to the public], its support in the Congress and among the American people", said Donald L Kohn, who spent 40 years at the Fed and retired as its vice chairman in 2010.

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