Trump Turns Up Pressure on Federal Reserve Ahead of Rate Decision

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The Federal Reserve is poised Wednesday to raise its key interest rate for the fourth time this year.

Amid brisk economic expansion after a decade of steady job growth, USA unemployment is flirting with a 50-year low, but the U.S. economy is expected to slow.

The Fed's Federal Open Market Committee, the body which sets interest rate policy, will announce its decision at 2 p.m. Wednesday. That hike would keep rates low by historical standards but put them at the highest level in a decade.

Trump's tweets about monetary policy have intensified as US stocks tumble amid signs the world's largest economy may be moderating. Also, don't let the market become any more illiquid than it already is.

Against this backdrop, observers are closely watching whether the central bank will slow down the pace, following eight rate hikes since 2015, when it ended the unusual zero percent rate policy.

But investors believe there is a chance the recent market turbulence could force the Fed to scale back its plans for three further rate rises next year.

Behind the Fed's shifting policy is a global slowdown, a U.S.

Mr. Trump renewed his criticism of the central bank Tuesday, urging Fed officials to read an op-ed in the Wall Street Journal calling for a pause in interest-rate hikes.

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"Russia and China are playing the Currency Devaluation game as the USA keeps raising interest rates. We also know that moving too slowly keeping interest rates too low for too long - could risk other distortions in the form of higher inflation or destabilizing financial imbalances", Powell said November 28.

There is a strong rationale for the Fed to raise rates in December, with further hikes in 2019 looking less likely as trade tensions between the U.S. and China continue to heat up amid a global economy that is showing significant signs of cooling down. The Fed says it is raising rates to return them to a more normal setting and avoid the type of boom-and-bust economy that ended in past recessions.

"The only argument I'm hearing for the Fed to raise rates now is somehow they have to exert their independence", he said.

Powell himself could provide clarity in his news conference if he indicates where he thinks the "neutral rate" is.

On July 20, Trump told CNBC that he was "not happy" about the Federal Reserve raising interest rates.

Trump's combative trade moves against China and other countries have escalated fears that the higher tariffs the United States has imposed and retaliatory tariffs from USA trading partners will depress growth in the United States and other major economies.

Trump's comments come after this weekend's Wall Street Journal opinion piece from investor Stan Druckenmiller and former Fed Governor Kevin Warsh. But while economists don't like Trump's Fed bashing, there are some who are starting to agree with the president that it's time for the Fed to hit pause on the rate hikes.

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