Trump says he’s ‘not happy’ that the Federal Reserve keeps hiking rates

Marco Green
July 23, 2018

During an interview with CNBC, Trump said that while Federal Reserve Chair Jerome Powell, who took over the role in February, was a "a very good man", he did not like the central bank's recent interest rate hikes.

The US and China have already imposed tit-for-tat tariffs of $34bn on each other's goods.

China has retaliated with duties of its own, hitting USA imports of soybeans and pork.

"I'm not thrilled, because we go up and every time you go up they want to raise rates again", Trump told CNBC. "Under such circumstance, the fundamentals look rather positive for the us dollar overall", he said. "We've been ripped off by China for a long time".

His remarks to CNBC weren't the first time that Trump has departed from a long-standing practice of USA presidents steering clear of commenting on Fed policy and the value of the dollar.

Mr. Trump's economic policies, including the biggest tax cut in US history, have fueled a strong economic expansion and record low unemployment. However, such a maneuver could also reignite an outflow of capital Beijing spent months trying to stanch.

On Friday, the yuan dipped to a 12-month low of 6.8 to the dollar, off by 7.6 percent since mid-February. While the FED is standing by its outlook on rates and the U.S economy, supporting the Dollar, Trump has, not only attacked FED policy, but also continued to up the ante in the trade war with China and Trump is winning the Dollar battle for now.

Asian markets mostly tumbled on Friday tracking a fall on Wall Street after US President Donald Trump criticised the Federal Reserve's interest rate hikes amid lingering fears about a global trade war. On Thursday, automakers and vehicle-making nations such as Mexico criticized the administration's study into whether auto imports pose a risk to national security, which could lead to tariffs. That's because China only imports $129.9 billion in USA goods each year.

It is quite obvious that, while not directly exposed to the trade conflict that has developed between the U.S. and China (and the USA and much of the rest of the world), Australia has a very large and economically vital indirect exposure through our trade relationships with China, which accounts for about 30 per cent of our exports.

Presidents have historically avoided criticizing the Fed, which is created to be independent from political interference. The interview was taped Friday afternoon, and CNBC aired Trump's complaints about the Fed shortly after. The Fed has been independent from political interference during its existence, so comments direct as these will undoubtedly stir debate.

The harsh comments took fresh aim at pillars of the global economic system and underscored Trump's break with long-established norms by again openly rebuking the Federal Reserve for raising interest rates. Tightening now hurts all that we have done. The US should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Powell told lawmakers that "for now - the best way forward is to keep gradually raising the federal funds rate".

Hoping to keep a lid on inflation as the world's largest economy gathers pace, the Fed has raised its benchmark lending rate seven times since 2015 and expects two more rate hikes this year.

Other reports by Click Lancashire

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