Trump (Again) Expresses His Displeasure with Federal Reserve Raising Interest Rates

Comex Gold

Comex Gold

A weaker United States dollar, which fell sharply this week after President Donald Trump criticised the Federal Reserve's interest rate rises, supported the rand's rally.

US central bankers are ready to raise interest rates again so long as the economy stays healthy, according to a record of the Federal Reserve's most recent policy meeting.

Trump's remarks to Reuters follow reports that the president criticized the Fed's interest rate hikes at fundraiser in Long Island over the weekend.

Asked by Reuters whether he believes in the independence of the Fed, the president said, "I believe in the Fed doing what's good for the country".

"During this period of time I should be given some help by the Fed".

He said the Fed was designed so that it would be accountable to policy makers and the public, but it was also created to be somewhat independent from jawboning from the White House. "The other countries are accommodated", Trump said.

In an interview with American Public Media's "Marketplace" radio show in July, Powell said he was "deeply committed" to maintaining the Fed's tradition of preserving its independence from political concerns.

Yield on the 10-year US Treasury note was near a six-week low of 2.807 per cent plumbed overnight in the wake of Trump's interest rate comments.

The discussion outlined the tough situation the Fed could find itself in should the trade disputes worsen, with USA businesses potentially needing to scale back hiring and consumers possibly facing higher prices on imports.




The staff gave a presentation on the lower boundary on interest rates and alternative policy tools.

Raising interest rates would increase the costs of borrowing money, which could slow economic growth and job gains.

Trump has attacked the Fed for raising rates in the past.

Federal Reserve chairman Jerome Powell has raised rates five times over the span of Trump's administration thus far, including twice this year.

Will Trump be able to pressure Powell into changing course?

Presidents usually avoid criticizing the central bank, which is created to be independent from political interference. Trump nominated Powell previous year to replace former Fed Chair Janet Yellen.

Trump has no say over the choice of the 12 regional Fed presidents like the Dallas Fed's Kaplan. The president does choose members of the policy-setting Fed Board, and in addition to Powell, he has appointed one Fed governor and nominated three others. Trump told Reuters, referencing Powell.

After sliding to a two-year low of 15.70 last week as the Turkish crisis triggered a broad flight from emerging markets, the rand has regained some ground, advancing around 8% in the last seven days as the greenback's rally faltered.

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