Despite Trump criticism, Fed sees need for more rate hikes

21 October, 2018, 02:09 | Author: Sally Reid
  • Last week US President Donald Trump called the Fed

The dollar rose to its best level in two weeks on Wednesday, as the US Federal Reserve signaled that the strong economy continues to justify additional interest-rate increases, Dow Jones Newswires reported.

Yellen spoke at a banking forum just days after the president repeatedly complained that the Fed was hurting financial markets and threatening economic growth by raising interest rates too quickly.

Last week, Trump criticized the United States central bank twice, saying it was raising interest rates so swiftly that it threatened the country's economic health.

"I'm not happy with what he's doing", said Trump in his interview with Fox Business on Tuesday, referring to chairman Jerome Powell, who was appointed by Trump previous year.

Trump has blasted the Fed since July for raising interest rates as unemployment nears record lows and economic growth accelerates due in part to the 2017 tax cuts.

Trump has recently waged a sustained campaign against the Fed, calling their interest rate hikes "crazy" and "loco".

"The current level of the policy rate is about right", Bullard said of the USA central bank's current short term policy rate, which is set in a range of between 2.00 percent and 2.25 percent.

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Though the minutes did not refer to any of Trump's criticism, its message of further rate increases suggests that policymakers are not fazed by it.

A couple of policymakers said the Fed should hold a "periodic and systematic review of the strengths and weaknesses" of the Fed's monetary policy framework.

The hike was the third of this year and the display of unanimity at the September 25-26 meeting could bolster expectations the central bank's rate-setting committee will raise rates again in December.

Trump added he is not trying to oust or blame Powell, whom he appointed to replace former Chair Janet Yellen. Members argued in favor of pressing ahead with one more rate hike in December, bringing the total this year to four. Mnuchin said Trump's complaints simply reflected his preference for low interest rates.

"Precisely because of the uncertainty around the course inputs, the right strategy was to set a course based on your knowledge of the destination, winds, and performance of your plane; communicate that course clearly to air traffic control so everyone knew what you were doing; and then stick to that course steadily even as the course needle might waver from side to side across your instrument", he said.

When asked if he thought the President should be weighing in on the agencies, he replied: "I don't think he should be making comments on any federal agency". Rather, some of the central bankers appeared to see some indications of a stronger USA economy.



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