Trump takes swipe at Fed for raising interest rates too quickly

Marco Green
October 19, 2018

Rate rises have become a divisive issue in the United States, with Donald Trump repeatedly criticising monetary policy decisions and labelling the Federal Reserve his "biggest threat".

Others said that, to avoid creating asset bubbles or having inflation run above the Fed's 2 per cent target for too long, the central bank would have to raise rates "above their assessments of its longer-run level".

Further rate hikes "would most likely be consistent" with the current period of firming inflation and historically low unemployment, according to minutes from the Federal Reserve's most recent meeting three weeks ago.

"I'm not blaming anybody, I put him there", Trump responded. "I put (Powell) there".

"My biggest threat is the Fed", he said, according to excerpts released before the interview with "Trish Regan Primetime" airs. Traders of futures contracts tied to the Fed's policy rate see rates topping out at about 3 percent.

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.

Those remarks came in a week when the stock market, which Trump has often cited as a barometer for his stewardship of the economy, was plunging.

Trump has blamed the market's big sell-off on rising rates and has described the Fed as being "out of control". The central bank has raised its key policy rate three times this year and is expected to do so again before year's end.

The Dow Jones industrial average on Wednesday fell 91.74 points, to 25,706.68.

The Fed independently makes policy decisions but regularly reports to Congress. Data since the Fed's last meeting in September has been in line with its portrait of a strong economy, and policymakers have said they expect to continue a rate-hike cycle that began in late 2015.

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

In February, Trump tapped Powell, then a member of the Fed's board, to become chairman after he had decided not to offer Yellen a second four-year term.

Interest rate increases ripple through the economy, making loans more expensive for businesses and consumers and thereby slowing investment and spending.

Trump appointed Powell but told Fox, "maybe it's right, maybe it's wrong".

Other reports by Click Lancashire

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