Fed risks Trump's fury over rate increases

Lloyd Doyle
October 19, 2018

In an interview with Fox Business Network Tuesday, Trump continued his on-going criticism of the Fed for its interest rate increases, which he thinks are slowing the economy. He said that he expects relatively strong growth could continue without running into economic constraints, but that the Fed should pay attention to other indicators of tightness and overheating in addition to inflation, such as direct measures of labor utilization or signs of shortages and bottlenecks in production.

While the US dollar has strengthened along with the entire domestic economy - which grew at a rate of 3.2 percent over the first half of 2018 - China's renminbi, also known as the yuan, has continued to fall in value.

Trump has blamed the market's big sell-off on rising rates and has described the Fed as being "out of control". Auto loan rates are at a nine-year high, and 30-year fixed mortgage rates recently climbed to their highest level in seven years.

Others said that, to avoid creating asset bubbles or having inflation run above the Fed's two-percent target for too long, the central bank would have to raise rates 'above their assessments of its longer-run level'.

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.

Instead, some members of the committee believed that the Fed would need to impose "modestly restrictive" conditions on the economy, the minutes show.


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

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

Washington has slapped punishing tariffs on about half of all China's goods exports to the United States, with talks to resolve the matter at an apparent impasse.

Compared to the minutes of Fed's previous meeting held in August, the September minutes appeared to show less discussion around the prospects that a recession might be lurking around the corner.

Companies facing higher materials costs told the Fed they had an 'increased ability to raise the prices of their products, ' according to the minutes.

Wall Street, which had struggled through much of the day, closed slightly lower, with stocks paring losses after the minutes' release.

Other reports by Iphone Fresh

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