Published: Fri, July 20, 2018
Finance | By Claude Patterson

Trump ups tariff threat, slams Fed, big US trading partners

President Donald Trump on Thursday said he's "not thrilled" the US central bank under Fed Chairman Jerome Powell is continuing to raise interest rates, suggesting the Fed may be undercutting his efforts to grow the economy.

The FTSE 100, which had edged up 11 points in early trading, fell almost 18 points to 7,666.00 after Donald Trump told CNBC's Joe Kernen in a Squawk Box interview today that he was prepared to tax all of the $505.5 billion of imports from China. "Now I'm just saying the same thing that I would have said as a private citizen", he said.

"Because we go up and every time you go up they want to raise rates again".

China has retaliated with duties of its own, hitting USA imports of soybeans and pork.

Indeed, overall financial conditions in the US are largely unchanged since Trump took office in January 2017 despite the Fed's gradual tightening campaign, and looser than they were on average in 2016, according to a Goldman Sachs index.

In the same interview, taped Thursday at the White House, Trump broke with a long-standing tradition at the White House and voiced displeasure about recent actions at the U.S. Federal Reserve.

Trump said he is "not thrilled" about the Fed's recent interest rate hikes. "I want them to do well", the USA president said of China.

Still, President Trump voiced concern that the higher rates and a stronger dollar may put the United States at a disadvantage while Fed counterparts in the Bank of Japan and the European Central Bank keep rates low, maintaining loose monetary policy.

Donald Trump said he was concerned about the potential impact on the USA economy and American corporate competitiveness from rising rates and a stronger dollar. "I really like President Xi a lot, but it was very unfair".

The evidence further supports the independent mission of the Fed and makes it important for presidents to keep out of monetary policy.

The Fed raised interest rates twice this year and Mr. Powell said two more increases are likely before the end of 2018.

Trump nominated current Fed Chair Powell, who had served as a governor on the board of the Fed, to serve at its helm after Janet Yellen's retirement in February. Both political and economic officials believe that the central bank needs to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy. The probability investors assigned to a Fed rate hike in September was little changed near 90 percent after the president's remarks, while the probability of a December hike was also holding near 65 percent, according to trading in federal funds futures. Low interest rates reduce the costs of borrowing money and fuel economic expansion, but risk spurring rampant inflation and financial market bubbles.

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