Can Trump bend the Fed to his will?

22 August, 2018, 13:55 | Author: Manuel Hopkins
  • Comex Gold

USA government bonds fell Tuesday as investors and analysts assessed whether President Trump's concerns about the Federal Reserve's moves to increase interest rates have potential to alter the path of monetary policy.

"I'm not thrilled with his raising of interest rates, no. I think on this one the market will come round again and the dollar bounces back, but nonetheless, it does appear the market is anxious that the president will exert influence on Fed policy". "The other countries are accommodated".

Past presidents from both parties have sought to insulate the central bank from political pressure, anxious it could taint the Fed's decision-making and erode its credibility with the public.

In currencies, the dollar came under pressure after Trump reiterated his displeasure at the Fed's rate hikes, saying the central bank should do more to help him boost the United States economy.

Powell's comments came after weeks of intensifying public pressure from President Trump, who has repeatedly said he would like Powell and the Fed to keep interest rates low to spur economic growth.

Trump since July has repeatedly criticised the Fed, an independent body that is not controlled by Congress or the president.

"The dollar has slipped in response to President Trump's comments, though the underlying upward trend remains intact", VTB Capital economist Neil MacKinnon said on Tuesday.

In the midst of a long riff on the economy, Mr. Trump said that he had expected Mr. Powell to adhere to an easy-money monetary policy, by keeping interest rates low, when he nominated Mr. Powell in November to succeed Janet L. Yellen.

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Trump was displeased with Powell's decision to raise interest rates, according to Bloomberg.

President Donald Trump continued to blast the Federal Reserve's recent interest rate hikes in an interview Monday, days after complaining about Federal Reserve Chairman at a private GOP fundraiser.

People's Bank of China official Li Bo also told reporters that China's yuan exchange rate was primarily market driven and that flexibility of the yuan exchange rate had increased. None of that has happened over the course of the Fed's existence, though, and that's why the President's comments have raised more than a few eyebrows.

Asked on Monday if he believed in the Fed's independence, Trump said: "I believe in the Fed doing what's good for the country".

"I am not happy about it".

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".

"If you look at the transmission from economic growth to earnings growth to shareholder returns, it's strongest in the USA, it's ok in Europe and pretty weak in EM", said Goldman's Kilmurray, who has been underweight emerging markets for five years.

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