Trump calls US Federal Reserve his 'biggest threat'

Cornelia Mascio
Ottobre 19, 2018

Trump says he knows the Fed is independent, but he thinks interest rates are rising too quickly. Auto loan rates are at a nine-year high, and 30-year fixed mortgage rates recently climbed to their highest level in seven years.

Still, the minutes released on Wednesday showed that, for the moment at least, American policymakers were largely in agreement about the near future - despite the increasing heat from the President, who fears higher rates could derail his economic agenda. "I put a couple of other people there I'm not so happy with too but for the most part I'm very happy with people".

So far this year, policymakers have already voted to hike short-term interest rates three times, and are poised to do so again in December, staying the course they laid out late last year.

Trump told Reuters in August he was "not thrilled" with Fed Chair Jerome Powell for raising interest rates, and has since escalated his criticism, this week saying the central bank is his "biggest threat", and last week calling the Fed "crazy", "loco", "ridiculous", and "too cute".

The minutes did not indicate that officials had reached a conclusion, but they did show that all Fed officials favored gradual rate hikes in response to a strong economy and low unemployment.

U.S. stock markets, which had largely expected a "steady as you go" statement, moved slightly higher but remained loss-making after the update, which stressed a continuation of the Fed's "gradual" approach to rate rise policy.

A few participants expected rates would need to rise enough to modestly restrain economic growth, even as two others "indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation".

Meanwhile, the Fed took notice of clouds forming on the horizon.

Furthermore, "some" at the meeting said that risks grew as the United States economy increasingly outpaces its rivals' more sluggish growth "because of the potential for further strengthening of the dollar".

Fed members said Trump's trade wars both created uncertainty and could boost inflation.

The White House has put punishing tariffs on more than $250 billion in annual Chinese imports.

Some investors say that, after years of easy money, pockets of risk have built up throughout the global economy as borrowing costs begin to increase - raising the chances that a bubble could burst or banks could see significant defaults on debt.

US stock prices recovered some earlier losses but were still down for the day following the minutes.

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