Trump urges Fed not to raise United States interest rates too fast

Lloyd Doyle
October 15, 2018

Trump said all of this after the longest streak of stock-market declines since the days before the November 2016 election. That was lower than economists' estimates, and pretty much in line with the Fed's two-per-cent target. Three have PhDs in economics and three have law degrees.

"They lived too well for too long and frankly I guess they think that the Americans are stupid people".

So as a born contrarian, I chose to take what I call a sanity stroll Wednesday afternoon as the madness mounted.

Trump has levied or threatened tariffs on goods from economies around the world, notably China, but also on traditional allies such as the European Union.

While it's unusual for the U.S. president to publicly bash the Fed, many investors agree that fears of higher interest rates are partly responsible for the volatility. And the higher that "bond vigilantes" expect inflation to be, the higher the interest rate they will demand to offset erosion of the money they invest in long-term securities. Lower borrowing costs meant higher corporate profits.

As far as the market selloff itself is concerned, Trump didn't seem too surprised.

From its beginning, the Fed was created to insulate it from political pressures.

The Republican president told the presenters: "They're [Fed bankers are] making a big mistake".

"And we just try to do the right thing for the medium and longer term for the country". "We don't let other things distract us".

The President said the markets were way up over what they were.

CNBC's Jim Cramer has also ripped the Fed, blaming Powell for not looking more closely at economic data before announcing its lockstep interest rate hike plans.

"No, I'm not going to fire him", Trump said.

The Federal Reserve has repeatedly pledged to raise rates only gradually. He also said he was not going to fire Fed Chairman Jerome Powell. He was persuaded by Treasury Secretary Steven Mnuchin that Powell, who was already a Fed governor, would be a force for stability. "They're so tight. I think the Fed has gone insane".

Some of his former advisers said they believed Trump's criticisms of the central bank were warranted.

According to Donald Trump, before departing for another campaign event in Iowa: "well, I like to see low interest rates".

"I don't think there was any new news that came out of the Fed today that wasn't there beforehand", Mnuchin said Thursday morning in an interview in Bali, Indonesia. "Where is the inflation that they are fighting?" And Evans was clear that his view of a slightly restrictive policy rate as appropriate would change if incoming data suggested inflation or inflation expectations accelerate. Economic growth has improved, and Republicans have taken steps to cut taxes and regulations. Reports recently have shown that the job market and economy are strong.

In a sign of how much animosity Trump now holds toward the central bank, Moore said he believes Trump regrets appointing Powell to the position. He also mentioned the Fed is monitoring other risks - "the strength of economies overseas, the effects of ongoing trade disputes, and financial stability issues" - all of which, if they prove real, would suggest less tightening rather than more as a monetary policy response.

Other reports by Iphone Fresh

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