Published: Sun, October 28, 2018
Markets | By Josh Butler

Feds A Greater Risk To US Economy-Says Trump

Feds A Greater Risk To US Economy-Says Trump

During an interview Tuesday with The Wall Street Journal, President Trump said that while the Federal Reserve has its independence when it comes to setting economic policy, he would like Chairman Jerome Powell to know that he wants interest rates lowered.

"Every time we do something great, he raises interest rates", Trump said, adding that Powell "almost looks like he's happy raising interest rates".

But for Donald Trump, who boasts of having "an economy vibrant", the monetary policy is now "the biggest risk", because according to him "the Fed raises the rates too soon".

Trump said it was "too early to tell, but maybe" he regrets nominating Powell last November to succeed Janet Yellen, who departed in February after leading the Fed for four years.

Asked in the Wall Street Journal interview what he saw as the biggest risks to the United States economy, Mr Trump said: "To me the Fed is the biggest risk, because I think interest rates are being raised too quickly".

"The funds rate is just now - For the first time in a decade - above the Fed's inflation objective, but the inflation-adjusted real funds rate remains below the range of estimates for the longer-run neutral real rate", Clarida said.

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And, even if subtly, the Fed is taking its own pots shots at Trump, noting that the general confidence in growth prospects also faces a few potential obstacles one fiscal policy stimulus starts to wear off. The interest rate was lowered by the bank to cope up with the recession of 2008. He said that while Fed watchers tend to focus on monetary policy, "what we have learned in the last 30 years is how important a strong regulatory system is...." "I'm just saying this: I'm very unhappy with the Fed because Obama had zero interest rates". "Trend growth in the economy may well be faster and the structural rate of unemployment lower than I would have thought several years ago".

In his remarks, Clarida said sustained stock-market turmoil would need to be part of the Fed's policy decision.

The political pressure "will in no way be a consideration as far as I'm concerned", Clarida said. With regard to unemployment, the Fed expects next year to see it at 3.5-percent, the lowest it's been at any point since 1969. He feels that this fluctuation in the interest rates will have a negative impact on the economy.

Orrin Hatch, Republican chairman of the Senate Finance Committee, on Wednesday defended Powell, telling Bloomberg News, "I don't agree with everything they do but they are still pretty good people". The Pound-to-Dollar rate was 0.36% lower at 1.2931 and the Euro-to-Dollar rate was 0.49% lower at 1.1414.

The US dollar is now steady against all major currencies.

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