Published: Fri, July 20, 2018
Economy | By Shawn Conner

Trump in unusual criticism of U.S. central bank

Trump in unusual criticism of U.S. central bank

Trump had already criticized the Fed's interest rate policy in an interview on CNBC on Thursday, saying he was concerned higher rates could impact the US economy.

Trump criticized the US central bank in comments aired Thursday, saying its course of interest rate increases counteracted his efforts at growing the economy.

Trump has told reporters before that the USA could target all of China's imports.

US Federal Reserve Chair Jerome "Jay" Powell, who was appointed by Mr Trump earlier this year, said this week that policymakers remain committed to further, gradual increases. I don't necessarily agree with it because he's raising interest rates, I'm not saying I agree with it, and I don't necessarily agree with it, I must tell you I don't.

Even though he's frustrated, Trump said he's "letting them do what they feel is best". Powell has said the economy is strong enough for the Fed to keep raising rates gradually.

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He added that Saudi Arabia's total supplies to the market are poised to drop by 100,000 bpd in August compared with July. Secretary of State Mike Pompeo signaled a softer line last week, noting that a lot of countries could request waivers .

A number of factors, including inflation and higher interest rates, could soon counteract the fiscal stimulus, however, and economists say the risk of recession in the coming years is growing.

Responding to the president's latest comments, the White House economic adviser Larry Kudlow told the news website Axios that provoking Trump would be a mistake for China.

In a series of tweets on Friday, Donald Trump complained about the Fed's current round of rate hikes, saying while policymakers in Europe and China are cutting their interest rates, America's central bank is doing the opposite, which is widening the trade imbalance he is trying to remedy.

While it's been many years, the White House has also been known to exert other forms of pressure.

Treasury yields and the dollar edged lower following the cable network's broadcast of that excerpt of its interview with the president.

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"This is extraordinary to see Trump go after the Fed like this", said Greg Valliere, chief global strategist at Horizon Investments.

"We're down a tremendous amount", said Mr Trump, reiterating his view that China's trade surplus with the United States amounts to unfair trading practices.

The comments raised the spectre of President Richard Nixon's pressure on the Fed in the 1970s, which led to economically damaging stagflation. Subtracting inflation, the rate is slightly negative in real terms and still "accommodative" for growth and borrowing, as the Fed said in its June statement.

'Of course the President respects the independence of the Fed. "I'm doing this to do the right thing for our country", Trump said in a CNBC interview aired Friday.

Jay Powell is about to earn that Trump is like The Federal Reserve's controlling ex-boyfriend.

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