Trump Implores Fed to Forego Another Interest Rate Hike

Trump Implores Fed to Forego Another Interest Rate Hike

Trump Implores Fed to Forego Another Interest Rate Hike

The US central bank raised the federal funds rate three times so far this year. The benefit of that stimulus will likely fade in 2019, slowing growth to a more modest pace. The unemployment rate is 3.7 percent, a 49-year low.

The stock market is enduring a painful stretch, with steep losses Monday sending US stocks to their lowest levels in more than a year. Trump has been critical of the Fed's plans to increase the rates saying it would damage the economy.

The expectation for this week is that the Fed will revise its predictions for next year down to two rate hikes and Powell will try to signal in his news conference that the Fed will be "data dependent" and more open to changing course as needed.

"We were assured by policy makers that QE provided large benefits to the real economy". The criticism breaks from the tradition of previous United States presidents, who would avoid weighing in on monetary policy out of respect for the Fed's independence. That's under the Fed's inflation target is 2%.

Speaking to CNBC, Navarro, director of the White House Office of Trade and Manufacturing Policy, said the central bank should pause its interest rate hikes - not because growth is slowing, but because growth is strong with barely any inflation.

The Fed's rates help set borrowing costs for various types of loans.

Still, the Fed is anxious about the economy overheating and says small, gradual interest rate increases are the best way to tap the brakes a bit to ensure inflation doesn't rise too quickly and bubbles don't form. Even with the increase, rates will remain near their historically low rates.

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But the dollar's strong showing is not the result of a USA economy on the rise, but rather the result of other currencies in decline.

Powell, who was Trump's choice to lead the Fed, has endure increasing public attacks from the president.

It is highly unusual for a president to be publicly vocal in any criticism of the Fed, though many presidents have complained privately about higher interest rates.

Trump has repeatedly broken with the norm respected by USA presidents in recent decades to refrain from criticizing the Fed, hammering the central bank this year over its move away from the zero interest rate policy implemented during the global financial crisis.

Trump has said he thinks the Fed is "way off base" by raising rates, but has been powerless to stop it from boosting them.

The president pointed to the Wall Street Journal editorial page which urged the Federal Reserve to "pause its double-barreled blitz of higher interest rates".

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