Pres. Trump steps up his attacks on Federal Reserve's rate hikes

Businessman looking down at a red 3D arrow chasing through concrete depicting financial losses

Businessman looking down at a red 3D arrow chasing through concrete depicting financial losses

Speaking on a panel at this week's International Monetary Fund and the World Bank meetings in Bali, Governor Mark Carney was asked about Trump's remarks.

Carney also praised Fed Chairman Jerome Powell's technocratic expertise. "They have to set rates today with an eye toward where core inflation is going to be 12 to 18 months out", he said.

Well, take that for what it's worth. "Actually, it's a correction that we've been waiting for, for a long time". But as the campaign has continued, the attention of markets has increasingly turned to when the Fed would stop raising rates. But let's look at the accepted script for what's been going on in the markets.

In September, the Federal Reserve raised short-term interest rates for the third time this year. "The president is not dictating policy to the Fed.They are independent".

According to reporting by CNBC interest rates have been on the rise over the past several weeks, with the benchmark 10-year Treasury note - a barometer for corporate debt and mortgages rates - climbing to its highest level in more than seven years.

Other data have also been stoking inflation expectations - higher energy prices, the September Producers Price Index (up 0.2 per cent), the 4.2-per-cent Q2 GDP growth reported at the end of September.

Rising U.S. yields are a major factor behind capital outflows putting pressure on emerging markets currencies. A spike in yields on U.S. 10-Year Treasury bonds, which are hovering at a more-than-seven-year high, has investors wondering if the near-decade-old bull market in stocks may finally be ending.

Then, because everything is connected, the bond selloff might have fed the rout on Wednesday. The Fed's goal of a neutral level that neither spurs nor slows economic growth is in clear conflict with that goal.




However, if there are supply chain disruptions and higher wages, that core rate will go up to 3 percent, said Roach.

Mr. Williams nodded toward some of the global concerns about the spillover effects of Fed rate rises by noting that the central bank has a domestic mandate, while adding it does very much take on board how its policies affect other nations.

This all makes sense, but it might be based on some questionable assumptions.

Lately, those prices have been heading sharply lower, meaning the bonds' yields have been spiking. I'm not so sure. And the fact is, Treasuries were already pretty attractive, at least compared to other sovereigns. He expects what is now a 3.7% jobless rate to fall to below 3.5% next year. Inflation is still relatively tame but may be showing more signs of life. On Thursday, the USA core consumer price index for September came in at 2.2 per cent.

Seoul fell more than three per cent and Sydney and Singapore both dropped two per cent.

The Federal Reserve is mandated by Congress to aim for low inflation and low unemployment. In a speech in Boston on October 2, Jerome Powell pointed out that at least since 1995, there has been no consistent inverse correlation between low unemployment and rising inflation. The selling is also taking place in very high volumes.

Trump's comments on the central bank Wednesday came a day after he said he did not like what they were doing in terms of monetary policy.

That trend is now reversing, albeit for mostly good reasons: The American economy is really strong, and the Fed is raising rates to keep inflation in check and make sure the economy doesn't overheat.

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