WASHINGTON, D.C.: US President Donald Trump on Wednesday (Thursday in Manila) continued to hammer the Federal Reserve (Fed), demanding more stimulus to boost the economy as the 2020 elections approach.
Trump, speaking to reporters at the White House, said a strong us dollar was hurting American manufacturers and that the Fed needed to lower rates further despite its cutting rates last month for the first time since 2008. The tweets come on the heels of surprise rate cuts by Thailand, India and New Zealand on Wednesday. The mood on stock markets was a bit better on Tuesday as Beijing solidified the exchange rate a little, but it doesn't take much of late to spark a big swoon or run up in stock prices.
Last week, Fed policymakers cut interest rates for the first time since 2008. Interest rate cuts have historically been the Federal Reserve's first line of defense against a US recession, while rate hikes are a guard against out-of-control inflation. The U.S. president on Monday urged the Fed to pay attention to his remarks when he falsely accused China of "currency manipulation" on Twitter.
While the Fed has yet to move at the pace Trump wants, his recent moves against China may force their hand. Powell, meanwhile, has repeatedly stressed the Fed's commitment to independence and said he fully intends to serve a four-year term.
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Four former Fed chiefs called for keeping the Fed independent from short-term political interference. "That can lead to unstable financial markets and worse economic outcomes".
Even as stocks and bond yields worldwide fell amid concern about Trump's escalating trade war with Beijing, he accused the U.S. central bank of being a bigger threat to the American economy than China.
The White House has aggressively lobbied for more substantive cuts in interest rates as a way to encourage borrowing and investment to stimulate economic growth.
"We are in a position to WIN anyway, then again it could per chance be mighty more straightforward if the Fed understood, which they don't, that we're competing against diversified worldwide locations, all of whom would actually like to enact well at our expense!" he acknowledged. According to Trump, the interest rate level held high by the Fed keeps the Dollar high compared to other countries.