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Trump escalates his war with the Fed

20 July 2018

The latter just yesterday completed the semiannual testimony to Congress on the economy, in which he reiterated the Fed's intention to continue to raise its key policy rate, the federal-funds target, at a gradual pace.

Auto tariffs would sharply escalate global trade tensions: The U.S. last year imported $192 billion in vehicles and $143 billion in auto parts - figures that dwarf last year's $29 billion in steel and $23 billion in aluminum imports.

"I'm ready to go 500", the Republican leader told CNBC, referring to the $505.5 billion in Chinese imports into the U.S.in 2017.

President Donald Trump upended almost three decades of presidential precedent by commenting on the Federal Reserve's interest rate policy on Thursday, but at least one economist thinks the president's remarks could come back to bite him. "The president's views on interest rates are well known, and his comments today are a reiteration of those long-held positions, and public comments". He said he was "not happy" about recent rate hikes.

'Of course the President respects the independence of the Fed.

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.

"Because we go up and every time you go up they want to raise rates again. I really like President Xi a lot, but it was very unfair". "But at the same time I'm letting them do what they feel is best", he said.

He added: "I'm ready to go to 500".

U.S. President Donald Trump addresses a cabinet meeting as his daughter senior advisor Ivanka Trump listens in the Cabinet Room of the White House in Washington, U.S., July 18, 2018.

"The [Fed's policy] committee has a mandate to keep inflation low and stable and obtain maximum employment for the USA economy, so people can comment, including the president and other politicians, but it's up to the committee to try to take the best action we can to achieve those objectives", St. Louis Federal Reserve Bank President James Bullard said Friday.

"The remarks certainly aren't an immediate threat to Fed independence, but they break with the tradition of respectful distance".

Nixon pressured the new Fed chairman to keep interest rates low to help maintain lower unemployment.

Trump told CNBC the hikes could damage America's ongoing economic recovery from the Great Recession. "In light of the European Union and others saying they are ready to respond to tariffs on cars, the stakes are rising fast".

Shortly after taking office, Trump withdrew from the Trans-Pacific Partnership (TPP), which he said would steal millions of jobs from Americans, while the North American Free Trade Agreement (NAFTA), signed by Canada, Mexico, and the United States, is now being renegotiated.

Both Dow and S&P stock index futures, already down on trade worries, fell further after the interview.

The Fed is now chaired by Trump appointee Jerome Powell, whom Trump described as 'a very good man'. "While inflation expectations are now well anchored, history shows us that a pervasive lack of central bank independence can rapidly, and without warning, lead to rising inflation and economic instability".

The US-China spat is the largest and broadest of several trade fights picked by Trump. Low interest rates reduce the costs of borrowing money and fuel economic expansion, but risk spurring rampant inflation and financial market bubbles.

Trump's comments that China and the European Union are manipulating currencies contradict a Treasury Department semi-annual report released in April that refrained from naming any country a currency manipulator based on specific criteria.

Trump escalates his war with the Fed