Published: Sun, October 21, 2018
Business | By Pearl Harrison

Trump escalates his attack on Fed: ‘My biggest threat’

Trump escalates his attack on Fed: ‘My biggest threat’

The continued "gradual" rate increases are regarded as insurance against that possibility. All three have called for gradual interest rate hikes that would slowly cut back stimulus while allowing the economy to grow without overheating.Trump has said that he felt duped by Powell and expected him to keep interest rates low.

The minutes did not indicate that officials reached a conclusion.

"The combination of a strengthening USA dollar and commodity price pressures could bring a test of the two-year low around $0.7040 in the coming sessions", said Sydney based Michael McCarthy, chief market strategist at CMC Markets.

President Trump has been critical of the increases, saying they may slow business growth.

"My biggest threat is the Fed, because the Fed is raising rates too fast", Trump told Fox Business host Trish Reagan.

In recent weeks, Trump has escalated his attacks, sparking alarm among Fed watchers and economists.

Quarles said that it is not unusual for presidents to comment on Fed policy.

"The fed raising interest rates too quickly, she's too independent", - he said and noted that he does not like what makes the Chairman of the regulator Powell, but to intervene in the policy of the fed, the President can not. Rising rates can often depress stock prices by leading investors to shift money out of stocks and into bonds to capture higher yields. Fed members said Trump's trade wars both created uncertainty and could boost inflation.

Chairman Powell - who Trump nominated last year to take the place of Janet Yellen, who held the position for four years - has said policymakers are seeking to restore rates to "normal" levels after the 2008 financial crisis.

In theory, Trump's concern that the Fed could potentially threaten economic growth isn't without cause.

In addition, business investment climbed 10 per cent in the first half of the year, which suggests productivity will rise, allowing the economy to continue to grow without fueling inflation and while attracting more workers into the labor pool, he told the Economic Club of NY.

Still, policymakers noted that the relative weakness of the global economy could create "potential for further strengthening of the USA dollar", a factor that could weigh on US exports.

Policymakers expect to raise rates again in December, and several times next year before the central bank's benchmark overnight lending rate reaches a "restrictive" level of around 3.40 percent sometime in 2020, according to the most recent set of Fed economic projections.

In what has emerged as a pattern recently, the administration official sought the day after Trump's comments to tamp down the unusual presidential criticism of the USA central bank, saying that Trump actually largely agreed with the Fed.

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