Trump bashes Fed chief Powell in interview with Reuters

by Frankie Norman August 24, 2018, 14:12
Trump bashes Fed chief Powell in interview with Reuters

US President Donald Trump criticised US Federal Reserve Chairman Jerome Powell for raising interest rates, breaking with recent presidents' practice of not commenting on the Fed's handling of the economy.

"I'm not thrilled with his raising of interest rates, no, I'm not thrilled", he said.

"Global risk sentiment remains somewhat jittery ahead of Fed Chair Powell's speech with US-Sino trade talks failing to yield any immediate progress", strategists at OCBC Bank wrote.

The president spoke to Reuters in an exclusive interview, the newswire said.

The dollar, on the ascent in recent months thanks to Fed rate rises and a robust USA economy, stumbled after Trump's latest criticism of the central bank.

The Fed has increased raised interest rates twice this year and is expected to do so again next month.

The Fed has raised interest rates five times since Trump took office in January 2017, with two of those coming this year under Powell. While economic theory (in the simplest terms) says that rate hikes slow the pace of economic growth, interest rates today remain historically low, and measures of credit growth show that access to loans is still generally easy.

Trump has also publicly criticized Powell several times this summer and reportedly did so again Friday at a GOP fundraiser in NY, saying he thought the chairman would support "easy money".

Lorber's fundraiser pulled in about $3 million for the Trump Victory Committee, which fills the coffers of the president's re-election campaign and the GOP. The Chicago Cubs co-owner Todd Ricketts, Commerce Secretary Wilbur Ross, Treasury Secretary Steven Mnuchin, and the White House adviser Jared Kushner were also there, according to Bloomberg.

The Fed declined to comment, but former Fed officials expressed alarm at Trump's repeated criticism.

Presidents usually avoid criticizing the central bank, which is created to be independent from political interference.

"Presidents have always made comments on how they think economic policy should be made, and I've not heard any effort by the president to try to interfere", said Senate Banking Committee Chairman Mike Crapo (R-Idaho).

Despite criticism from the White House, economists give the Powell-led Fed very high marks. Trump told Reuters, referencing Powell.

President Donald Trump is, famously, not a big believer in institutional or even constitutional constraints on his power and his prerogatives.

"Well, the Fed was set up to be independent from politics as much as you can be in Washington, from the whims of the moment, whether it's the president or whether it's the Congress", Shelby said.

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