Trump Renews Fed Attack, Saying Interest Rates Way Too High

Lloyd Doyle
June 12, 2019

The report from the Labor Department on Wednesday, however, showed some pockets of inflation, with rents and health care costs rising solidly, which could buy the USA central bank some time before easing monetary policy.

Compared to May of past year, the core CPI is 2% higher, slowing slightly from the 2.1% pace of a month earlier.

"The market is looking for the Fed to give an indication next week that it's going to cut rates in July", said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Sarasota, Florida.

America's greenback has suffered broadly of late as investors dumped it in response to increasing signs the economy is slowing which, coming amid an escalation of the U.S.

In its place is likely to be something more along the lines of what Powell said last week - namely, that the Fed is "closely monitoring" the economy and is ready to "act as appropriate to sustain the expansion".

"The Euro and other currencies are devalued against the dollar, putting the a big disadvantage", Trump tweeted on Tuesday without offering any evidence. It tends to run slightly below the Labor Department's CPI.

At the same time, inflation is showing signs of firming by another measure that the Fed prefers.

The Fed's preferred inflation measure, the core personal consumption expenditures (PCE) price index, increased 1.6 per cent in the year to April after gaining 1.5 per cent in March. Retail sales were down by 0.2% m/m in April but are forecast to have rebounded by 0.6% in May.

-The report showed used-car prices dropped 1.4 per cent from the prior month while new auto prices increased 0.1 per cent.

The index for all urban consumers increased by 1.8 percent for the past year while it jumped 1.7 percent for urban wage earners and clerical workers.

U.S. housing costs have been rising steadily as rents have increased 3.7% in the latest 12 months, while the equivalent costs for homeowners in up 3.3%, according to the data. Rent of primary residence rose 0.2 per cent. Food prices rebounded 0.3% in May after dipping 0.1% in the prior month.

The so-called core CPI was held down by a sharp decline in the prices of used motor vehicles and trucks as well as medical care products. But the prices for prescription medication fell 0.2%.

The Pound-to-Dollar rate was 0.11% higher at 1.2737 but is down 0.02% for 2019 after having fallen 2% in the last month.

The single currency was little affected by U.S. President Donald Trump's accusation that Europe was devaluing the euro, which has gained roughly 1.4% against the dollar so far in June.

Other reports by Iphone Fresh

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