Trump takes swipe at Fed for raising interest rates too quickly

Trump slams ‘too independent’ Fed as his ‘biggest threat

Reuters Carlos Barria

The former Fed chair's comments add to a chorus of voices who say it's unusual and even perhaps unsafe for a president to openly criticize central bank policy, which is charged by Congress with focusing on delivering maximum sustainable employment and stable prices. But as with many other aspects of the office, Trump has broken tradition.

Yes: Pack the Fed. There are now three vacancies on the board; Mr. Trump has named nominees to fill two of them. If and when that happens, my sense is that the president will be thankful for the Fed. In fact, the BOJ has said that it will leave the negative interest rates for a longer period.

NO: The Federal Reserve's measured approach to normalizing rates has been and continues to be "Goldilocks, just right".

Experts on the Fed point out that if Mr. Trump was serious about using this method, he would have already done so.

US oil prices tumbled and Brent also fell on Wednesday after crude inventories rose by much more than expected and exports fell, while the dollar added to gains after minutes showed Federal Reserve policymakers generally agreed borrowing costs were set to rise further.

In Wednesday's report, the Treasury also said Germany, India, Japan, South Korea and Switzerland remained on a "monitoring list" of countries whose currency practices required "close attention".

White House economic advisor Larry Kudlow said on Wednesday that Trump was not demanding a policy change after heaping more criticism on the Fed on Tuesday, when he called rising USA interest rates his "biggest threat". This is because other central banks have not moved from the low interest rates. "He didn't do that". There are some four-week bills, some 13-week bills, some 10-year notes, and so forth. He has said the economy is strong and can afford to pay higher interest.

"If you did all your borrowing at the very short end, if everything you did was 30-day loans, presumably that would push up short-term rates and push down long-term rates", he said. The Federal Reserve is expected to raise rates again in December, but it appears that this expectation is factored into current market sentiment.

This method, dubbed "Operation Twist", has been used intermittently, including under John F. Kennedy and shortly after the Great Recession.

WTI crude touched its lowest price in a month after USA stockpiles rose by 6.5 million barrels, nearly triple what analysts had forecast. "The sense of the meeting was more hawkish than investors might have thought".

NO: With the economy at full employment, now is the time for the Federal Reserve to be increasing interest rates. Raising rates is the Fed's way of lowering the risk of runaway inflation, which happens when competition for labor and a shortage of goods in a fast-growing economy leads to big increases in wages and prices. At that point, the policy rate would be at 3.4 percent, according to the median of Fed officials' individual forecasts. That's about how much the Fed has been raising rates every time it meets to do so. Carney came to Powell's support in an interview as he said that the latter "is an individual that really understands the plumbing of the USA and global financial systems". The neutral rate is the point at which the Fed believes its policy would be neither boosting growth nor restricting it. "It's like a failsafe trigger".

USA stocks fell on Thursday as weak earnings reports from industrials raised worries over rising expenses and the impact of tariffs, adding to concerns of higher borrowing costs after hawkish commentary in the Federal Reserve's minutes. Doing so "would cause mayhem", Richardson said.

". The president and I completely agree on what has to be done". U.S. President Donald Trump said on Thursday it "certainly looks" like U.S. -based Saudi journalist Jamal Khashoggi is dead.

And Mr Quarles, the Fed's vice-chairman of financial supervision, said he was hopeful economic productivity "could accelerate from its relatively anemic pace of late, sustaining growth without overheating the economy". Consumers and companies are so convinced that the central bank won't let inflation get out of control that they act in ways that turn that belief into reality. "They're human beings", said Richardson.

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