Trump claims Fed rate hikes hinder USA economy

Cornelia Mascio
Luglio 20, 2018

In excerpts of an interview with United States television network CNBC aired Thursday, Trump said a strong dollar "puts us at a disadvantage", adding that the Chinese yuan "has been dropping like a rock". But JPMorgan economist Michael Feroli advanced an interesting alternate theory: Trump's comments may inspire the Fed to go the other direction. But rate increases also make borrowing costlier for households and companies and can weaken the pace of growth.

The U.S. central bank has hiked rates twice this year and most experts expect two more increases by year's end.

Representatives for the Fed could not immediately be reached for comment.

"I don't necessarily agree with it, because he's raising interest rates ..." The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating.

That policy drew rebukes from many Republican lawmakers. In the CNBC interview, Trump called Powell a "very good man". Last week, Powell said in an interview with the radio program Marketplace that he didn't expect to face pressure from the White House.

President Donald Trump lashed out at China and the European Union for their weak currencies and said a stronger dollar and rising interest rates are undermining America's "competitive edge", taking a fresh jab at the Federal Reserve. "We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently".

"I don't really - I am not happy about it", he said. Stocks and the dollar fell.

Trump, in an interview with CNBC, said he does not approve, even though he said he "put a very good man in" at the Fed in Powell.

"The president's views on interest rates are well-known, and his comments today are a reiteration of those long held positions, and public comments", Walters said. "But at the same time I'm letting them do what they feel is best".

"The Fed's reckless monetary policies will cause problems in the years to come", Trump tweeted in 2011. "The remarks certainly aren't an immediate threat to Fed independence, but they break with the tradition of respectful distance".

Marc Goldfried, chief investment officer and head of fixed income at Canoe Financial, reacts to the latest commentary from the U.S. Federal Reserve Chair Jerome Powell.

Mr Trump has said before that he favours low interest rates, and dismissed concerns about his interference.

During the presidential campaign, he expressed his preference for low interest rates but also blasted the Fed under former Chair Janet Yellen for running an easy monetary policy to boost the economy in order to help Hillary Clinton's campaign.

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