What Trump Says Is the Biggest Threat to His Presidency

Marco Green
October 18, 2018

FBN's Jennifer Schonberger gives a summary of the Federal Reserve's minutes from its September meeting. Despite his criticism of the Fed's policymaking, Trump's picks have been seen as representing the mainstream of economic thinking about how a central bank should manage interest rates.

"Participants generally anticipated that further gradual increases in the target range for the federal funds rate would most likely be consistent with a sustained economic expansion, strong labor market conditions, and inflation near 2 percent over the medium term", the Fed's minutes said.

China's benchmark stock index skidded to four-year lows and dragged Asian equities down on Thursday, as renewed fears of a broadening economic impact from an escalating Sino-U.S. trade conflict sapped confidence.

The dollar index, which measures its value against six major peers, last traded at 95.654, little changed on the day, while 10 year Treasury yield last stood at 3.211 percent, 3.2 basis points higher than the U.S. close.

The U.S. dollar index.DXY and Treasury yields rose to its highest levels in a week on Wednesday.

But some Fed members warned that instability in emerging economies - many of which are heavily indebted and vulnerable when USA rates rise - could "spread more broadly through the global economy and financial markets".

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

According to the minutes: "A few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level". Trump says he knows the Fed is independent, but he thinks interest rates are rising too quickly. The next rate rise could come as soon as December. At that point, the policy rate would be at 3.4 percent, according to the median of Fed officials' individual forecasts.

In the minutes, policymakers said estimates of the neutral rate would only be "one among many" factors going into monetary policy decisions.

Trump's criticism intensified after last week's big stock market tumble, which has been partially reversed this week.

The U.S. economy has been growing more quickly this year than many economists believe is possible without generating higher inflation, with the jobless rate at its lowest level in decades.

The minutes showed that "almost all" policymakers agreed it was time to stop saying they were stimulating the economy.

Other reports by Click Lancashire

Discuss This Article

FOLLOW OUR NEWSPAPER