Trump demands Fed help on economy, complains about interest rate rises

Kenny Grant
August 21, 2018

President Donald Trump is not happy with Fed Chairman Jerome Powell and has increased his attacks against the Fed Chief for not acting like a "cheap money" central banker when it comes to interest rates. It followed reports earlier in the day that Trump had criticised Powell at a private GOP fundraiser.

Recent presidents have largely avoided criticising the Fed, trying to preserve the bank's independence and its credibility with financial markets, foreign governments and the public.

USA stock prices dipped after Trump's comments to Reuters and the US dollar edged down against a basket of currencies.

U.S. President Donald Trump answers question from Reuters reporters Steve Holland, Jeff Mason and James Oliphant as White House Press Secretary Sarah Huckabee Sanders listens during an interview with Reuters in the Oval Office of the White House in Washington, U.S. August 20, 2018.

Donald Trump chose Jerome Powell past year to head the United States central bank, promoting a soft-spoken centrist to replace Janet Yellen.

However, JP Morgan Asset Management global market strategist Tai Hui said: "Given the little progress made on the US-China negotiations in the past six months, investors' expectations are still low". Next time he mutters veiled threats against the Fed, some real turbulence could ensue.

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Powell has described the economy as "strong" numerous times this summer, but he also sees this as an opportune time to lift interest rates back to normal levels after years at historic lows, a Fed effort to stimulate the economy in the aftermath of the financial crisis and Great Recession. "The other countries are accommodated".

"However he just wants the headline figures. he wants the stockmarket to rise but at the same time he's accusing the European Union and China of manipulating their currencies".

Kohn said he didn't think Powell or the Fed would change their course because of Trump's remarks. Two, comments like these will produce diminishing returns for the president.

"We're going to do our business in a way that's strictly nonpolitical, without taking political issues into consideration, and that carries out the mandate Congress has given us", he said.

Trump and National Economic Council Director Larry Kudlow have both called on Powell to ease off rate hikes to keep the booming economy growing and dismissed concerns about inflation. "I'll let you know in seven years".

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