Is The Fed Trying To Tank The Trump Economy Before The Midterms?

Is The Fed Trying To Tank The Trump Economy Before The Midterms?

Is The Fed Trying To Tank The Trump Economy Before The Midterms?

President Trump took aim at the Federal Reserve this week, saying the us central bank had "gone crazy" by raising interest rates too quickly, sparking backlash among prominent leaders in the business and economic communities.

He has frequently criticised the U.S. central bank for gradually raising interest rates, and on Wednesday reiterated his position: "I really disagree with what the Fed is doing".

"I'm paying interest at a high rate because of our Fed", he said.

The central bank had raised the benchmark lending rate, which affects everything from mortgages to vehicle loans to bond yields, just twice before Mr Trump took office in January 2017, after a campaign in which he criticized the institution for allegedly keeping rates near zero in a bid to help his opponent.

United States presidents have rarely criticised the Fed in recent decades because its independence has been seen as important for economic stability.

The Fed, led by Jerome H. Powell, a Trump appointee, is predicting a soft landing. "I think I know about it", he said.

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"He has never attacked the Fed's plan or strategy", Kudlow told reporters on the White House lawn Thursday.

Trump has by turns called the Fed "crazy" and "loco" and said it was being "too aggressive in raising rates", blaming the institution for the market declines that saw the benchmark Dow Jones Industrial Average lose almost 1,400 points in two days.

Trump, who departed for Erie just before markets closed on Wednesday, was briefed by officials about the sell-off.

The Fed has said strong economic performance in the USA means that the ultra-low rates put in place to spur economic activity after the 2008 financial crisis are no longer necessary.

He said the stock-market drop is "a correction that I think is caused by the Federal Reserve with interest rates". Investors might, for example, question whether the Fed would feel free to keep raising rates, if it felt it necessary to control inflation.

President Donald Trump has zeroed down on the Federal Reserve's interest rate increases as the main reason for yesterday's nosedive in stock prices.

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Put another way, very low real interest rates favor borrowers over savers. Trump is concerned that the Fed will raise interest rates too fast and hurt growth, a legitimate issue, he explained.

On the back of historically-low unemployment rates, a humming economy, and a record bull market, the Fed has already hiked interest rates three times this year.

Mr Trump also renewed his criticism of the USA central bank. As interest rates go up, bonds, not equities, are starting to look more attractive to investors.

USA investors are suffering their biggest losses since February which have escalated tensions between Trump and Powell. "The problem in my opinion is the Fed", he added.

So, no, the rout wasn't caused by growing worry over Trump's trade wars, which the International Monetary Fund cited in cutting its outlook for global growth on Tuesday. And tech stocks got hit particularly hard.

Trump said the downslide of the stock was in fact a course correction.

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But a fall would be a concern to the president, who frequently cites stock market performance as a sign of his administration's success. But according to the Wall Street Journal other officials have expressed a range of views, and some uncertainty, about how high rates would have to go to reach a so-called neutral level that neither spurs nor slows growth.

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