Economy

Trump in unorthodox criticism of USA central bank

Trump in unorthodox criticism of USA central bank

U.S. President Donald Trump on Thursday told CNBC in an interview that he was "not thrilled" about the U.S. Federal Reserve's decision to hike interest rates, according to the television network.

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.

The Federal Reserve got a rare piece of advice from the president Thursday.

The comments raised eyebrows in the USA, where presidents are expected to avoid criticism of the central bank in deference to its independence. In particular, the Fed's most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law previous year.

Even though he's frustrated, Trump said he's "letting them do what they feel is best".

President Trump looks on as his nominee for Federal Reserve chairman, Jerome Powell, takes to the podium at the White House on November 2. Higher interest rates mean higher borrowing costs for consumers and higher mortgage rates.

Trump also said Fed Chairman Jerome Powell, whom he nominated, is "a very good man".

More news: Tables could turn on British Open's harshest commentator

"But I don't like all of this work that goes into doing what we're doing".

It's always been speculated that the taboo of commenting on USA monetary policy could change under Trump, who slammed the Fed during his election campaign and has demonstrated repeatedly his willingness to flout the conventions and sensibilities of establishment Washington.

The U.S. dollar index cut its gains after Trump's comments that the strong dollar "puts us at a disadvantage", while yields on U.S. Treasury securities hit session lows.

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.

Powell addressed Congress this week and told lawmakers that "for now - the best way forward is to keep gradually raising the federal funds rate".

The White House defended his remarks, saying, "Of course the President respects the independence of the Fed".

The comments raised the specter of President Richard Nixon's pressure on the Fed in the 1970s, which led to economically damaging stagflation. While the Fed has raised rates, they remain low on a historical basis.


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