Trump escalates his war with the Fed

22 July, 2018, 14:30 | Author: Brooke Harris
  • In Rare Move for a President, Trump Criticizes Fed

Many companies in the U.S. are opposed to the administration's use of tariffs against China, saying they risk hurting business and the economy without being likely to change behaviour.

Mr Powell, perhaps wary of provoking the ire of the president, has also been particularly careful in press conferences and congressional testimony when asked to comment on Mr Trump's tax and trade policies.

The Fed has raised interest rates five times since Trump took office in January 2017, extending the campaign it began in 2015.

Axios reports on Friday that "chances of a longer, wider, more damaging trade war with China are rising", with one possible scenario including China goading Trump into a trade war.

The US$500 billion figure is about the value of Chinese goods imported into the USA past year.

"I'm ready to go to 500", Trump said the CNBC interview broadcast Friday.

Trump's budget director Mick Mulvaney separately took the Fed to task for allegedly not recognizing that the president's policies can allow the economy grow faster without spurring inflation.

Trump's remarks immediately raised questions about Trump's commitment to the Fed's political independence, a key pillar of the central bank's function.

Mr Trump also called Mr Powell, who he appointed to succeed Janet Yellen, "a very good man". By maintaining its independence, the central bank can make politically contentious decisions to combat economic challenges, like the huge bond purchases it made after the 2008 financial crisis to help drive down long-term rates to support the economy. China accused American officials of making false accusations Thursday as it fired back against a claim President Xi Jinping is blocking talks with the USA over the trade war between both nations.

Power and Norms Rule Trade War with US, Says China
The US move is the latest salvo in a growing trade war started by the imposition of US tariffs on steel and aluminium imports. In response, government regulators have blocked a number of Chinese acquisition deals involving American firms this year.

"My experience at the Fed is consistent with what Jay Powell recently said - being non-political is deep in the Fed's DNA - and I believe that Jay will keep it that way".

US President Donald Trump's extraordinary broadside against the Federal Reserve on Thursday may end up getting him exactly what he doesn't want: higher interest rates.

"All those things point to the Fed continuing to raise interest rates and the economy being fairly strong, relative to all the global issues going on: trade wars, the fear in Europe of Brexit without a clear path". "I don't really-I am not happy about it". But at the same time I'm letting them do what they feel is best'.

He also said that higher interest rates will strengthen the USA dollar too much, putting the United States at a "disadvantage" while central banks in Europe and Japan keep rates low.

But Trump launched his attack first on Thursday during an interview with CNBC and continued on Friday on Twitter.

"I'm not thrilled", he said in an interview on the television network.

But, with unemployment at historic lows and inflation on the rise, Powell has said the USA economy is strong enough to weather the interest rate increases.

"Unfortunately, the high and volatile money growth of the past, and the high inflation and high interest rates which accompanied it, were instrumental in bringing about the poor and highly uneven economic performance of 1980 and 1981, culminating in a sharp fall in output and a rise in unemployment in the latter months of 1981", Reagan said. I couldn't care less what they say, because my views haven't changed.

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