Trump once again criticises Federal Reserve, rate hikes
Exterior view of the US Federal Reserve building in Washington, DC. (AFP/KAREN BLEIER)
WASHINGTON: President Donald Trump once more broke with protocol on Monday (Aug 20) as he criticised the US Federal Reserve for raising interest rates and accused it of failing to support his economic policies.And in an interview with Reuters, he declined to confirm his support for the central bank's independence, something that has the potential to worry financial markets.
That was a step further than Trump went just a month ago, when he also said he was "not thrilled" with the Fed for raising the key interest rate.As the US economy has recovered, the Fed has raised the benchmark lending rate seven times since December 2015, twice this year under current Chairman Jerome Powell, and it expected to hike twice more in 2018.Powell in a radio interview in mid-July said he was not concerned about pressure on him to alter policy, saying "we don't take political considerations into account."He added at the time that "no one in the administration has said anything to me that really gives me concern on this front."
Trump nominated Powell to lead the Fed after declining to give a second term to Janet Yellen, someone he harshly criticized during the presidential campaign in 2016, accusing her of keeping rates low to help his opponents.He repeated his criticism of monetary policy under Powell's leadership at a fundraiser on Friday, according to reports by the Wall Street Journal and Bloomberg."I'm not thrilled with his raising of interest rates, no. I'm not thrilled," Trump repeated in the interview with Reuters on Monday.Asked if he believed in Fed independence, Trump said: "I believe in the Fed doing what's good for the country."
Questioning Fed policy is normally off limits for US politicians, since it could raise fears central bankers would fail to act to head off rising inflation. But Trump's has not been a normal administration.Trump criticism of the Fed "attracted a lot of attention" but did not really move the stock or the bond markets, LBBW market strategist Karl Haeling told AFP."So far people don't think it's going to change the Fed's policy, at least for its meeting in September."However, Trump's criticism "has definitely been a driver" of currency markets, according to David Gilmore from Foreign Exchange Analytics.But "I don't think anybody thinks Powell will be influenced by that."The dollar index moved slightly lower after the Bloomberg and Wall Street Journal stories and accentuated its drop after Reuters' story.
Source : https://www.channelnewsasia.com/news/business/trump-once-again-criticises-federal-reserve-rate-hikes-10636034