Published: Sat, July 21, 2018
Business | By Eloise Houston

Trump slams Fed's rate policy despite strong economy

Trump slams Fed's rate policy despite strong economy

In a taped interview with the business channel CNBC, Trump warning, "I'm willing to go to 500", meaning he's prepared ultimately to impose tariffs on $500 billion in Chinese imports - roughly the value of all the goods Beijing shipped to the United States a year ago. "We have been ripped off by China for a long time", he said.

President Donald Trump on Thursday said the Federal Reserve is hampering the economic recovery by raising interest rates.

"We don't think the dollar rally is at a risk of ending as the economic momentum is still quite strong, though Trump's comments have given an impetus for profit taking", said Manuel Oliveri, a currency strategist at Credit Agricole in London.

Trump's remarks immediately raised questions about Trump's commitment to the Fed's political independence, a key pillar of the central bank's function.

CNBC calls the rebuke "stinging and historically rare criticism", noting that presidents typically don't intercede with Fed affairs.

After the interview, Trump reiterated criticism of planned interest-rate hikes by the Federal Reserve, saying in a Twitter post that tightening policy would diminish any United States advantage in trade and exacerbate losses from "BAD trade deals".

The U.S. dollar index .DXY cut its gains after Trump's comments, while yields on U.S. Treasury securities hit session lows.

Even though he's frustrated, Trump said he's "letting them do what they feel is best".

This was not the first time Trump departed from a long-standing practice of US presidents steering clear of commenting on Fed policy and the value of the dollar, a custom he dismissed on Thursday.

He added, "No one in the administration has said anything to me that really gives me concern on this front".

China's central bank is allowing its tightly controlled currency to drift lower against the dollar, a move that could help Chinese exporters cope with USA tariff hikes.

Trump nominated Powell as Fed chairman past year to replace Janet Yellen.

Beijing is targeting, in particular, sectors like American agriculture that could harm Trump politically at home.

U.S. central bankers project two more interest rate increases this year and another three in 2019.

'I don't like all of this work that we're putting into the economy and then I see rates going up'.

Trump said he is "not thrilled" about the Fed's recent interest rate hikes.

A top Federal Reserve official, meanwhile, warned the trade war could hurt the USA economy.

The question is whether Trump's remarks mark the beginning of a new era of greater US intervention, one in which the president and members of his cabinet feel free to weigh in on economic issues that were traditionally seen as outside the political domain. There will be many "who see that as the Fed yielding to a combative president", Conti-Brown said.

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