Trump amps up criticism of Fed interest rate rises

Marco Green
July 20, 2018

Trump told CNBC in an interview that ran on Friday that he is "ready to go to 500" on tariffs on Chinese imports.

The central bank lifted the funds target twice in quarter-percentage-point increments this year, most recently last month, to 1.75%-2%.

Doing so slows growth, as it raises the cost of borrowing, but can also prevent the economy from overheating and tipping into recession.

Although he does not approve with recent hikes, President Trump followed up by saying he put a "very good man in" at the Fed.

The Fed had no comment. The released Nixon tapes revealed numerous conversations between the president and Burns in which Nixon pressures the Fed chair to keep rates low.

The Fed's dual mandate is to maximize employment and stabilize prices.

The Fed slashed short-term rates to near zero in the wake of the 2008 financial crisis.

That policy drew rebukes from many Republican lawmakers at the time, but the Fed proceeded with its plan regardless.

In February, Jerome Powell, Trump's hand-picked choice, became Fed chairperson.

Nor is it the only time the Fed and the White House have clashed. "We've been ripped off by China for a long time". Interest rates are seen as the domain of the central bank, while the currency is regarded as the responsibility of U.S. treasury officials.

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

After he posted the tweet, the U.S. Dollar Index fell slightly.

Beijing is targeting sectors, like agriculture, that could harm Trump politically at home, though he said in the CNBC interview that he is seeking to do only what is fair.

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". "But at the same time I'm letting them do what they feel is best".

Trump's rebuke broke with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the U.S. central bank.

The Federal Reserve did not immediately respond to a request for comment.

Trump tapped Powell, who had served as a governor at the US central bank, to serve at its helm following Janet Yellen. Bloomberg's headline says Trump "trespass [ed] on Fed's independence".

In response to the president's tweet, St. Louis Federal Reserve Bank President James Bullard said on Friday that regardless of who comments, the Fed is committed to its two main objectives: keeping inflation low and stable and obtaining maximum employment.

Senior EU officials, including the European Commission's president, Jean-Claude Juncker, are set to fly to Washington, DC, next week with the aim of persuading Trump not to levy punitive tariffs on European automobiles. But he also told CNBC during the campaign that he is a "low interest-rate-person".

Other reports by Click Lancashire

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