Further US rate hikes 'most likely' needed: Fed minutes

Cornelia Mascio
Ottobre 18, 2018

U.S. President Donald Trump heaped more criticism on the Federal Reserve in an interview with Fox Business Network on Tuesday, extending his discontent beyond its chairman, Jerome Powell, whom he has frequently critiqued in public.

At the September meeting, the Fed boosted its key policy rate for a third time this year. "I put him there and maybe it's right, maybe it's wrong but I put him there".

Those remarks came in a week when the stock market, which Trump has often cited as a barometer for his stewardship of the economy, was plunging.

Mike Loewengart, vice president of investment strategy at E*Trade, said: "For now, the Fed has made it clear that they are focused on their agenda despite rising presidential pressure on their rate decisions".

The median view of all Fed officials was that rates should be increased one more time this year and three times next year and a final quarter-point rate hike in 2020. Last week he slammed the central bank as "out of control" and said it was "going loco", blaming its monetary policy for a sell-off in the stock market. The Dow Jones Industrial Average jumped 547 points.

U.S. Treasury Secretary Steven Mnuchin has said that Trump respects the independence of the Fed despite even though he prefers low interest rates, the Associated Press reports.

Further rate hikes "would most likely be consistent" with the current period of firming inflation and historically low unemployment, according to minutes from the Federal Reserve's most recent meeting three weeks ago.

But, amid brisk American expansion, some Fed policymakers also warned of looming dangers to the world economy, such as the potential for a strengthening USA dollar and possible contagion from sputtering emerging markets, according to minutes from the Fed's most recent meeting three weeks ago.

In his first two years in office, Trump has had the rare opportunity to nominate or re-nominate officials for six of the Fed board's seven seats.

The central bank continues to have a bullish outlook on the US economy, and praised "robust increases" in household income, the minutes show.

On the other hand, while risks were 'roughly balanced, ' some Fed members said instability in emerging economies - many of which are heavily indebted and vulnerable when U.S. rates rise - could 'spread more broadly through the global economy and financial markets'.

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