Economy

Donald Trump calls on Fed to make 'substantial' rate cuts

Donald Trump calls on Fed to make 'substantial' rate cuts

Hardline White House trade advisor Peter Navarro on Tuesday said the Fed should cut as much as a full percentage point from the key interest rate to reverse the increases made a year ago as the economy was in a strong recovery. Interest rate cuts have historically been the Federal Reserve's first line of defense against a USA recession, while rate hikes are a guard against out-of-control inflation. President Trump and his advisors have also repeatedly alleged that the current interest rates were responsible for the dollar's strength against other currencies, and that this harmed United States exports. Almost 72 percent of traders expect the Fed to lower the rate by 25 basis points and the remaining 28 percent expect a cut of 50 basis points. They must cut rates bigger and faster and stop their ridiculous quantitative tightening now. "The increase in uncertainty affects business investment". Earlier this week, he called China a "currency manipulator".

President Trump pointed to interest rate cuts by three foreign central banks Wednesday as proof that the Federal Reserve's monetary policy, not his trade war with China, is the cause of "our problem". Those countries are likely to feel the impact of a slowing Chinese economy and a decline in trade. Investors took the view that deeper Fed easing was needed and US stocks fell.

On Twitter, the president said of the Federal Reserve, "Incompetence is a awful thing to watch, especially when things could be taken care of sooo easily".

So, one takes it that Mr Trump is none to pleased with the Federal Reserve at the moment. St. Louis Fed chief James Bullard, speaking in Washington on Tuesday, said that "U.S. monetary policy can not reasonably react to the day-to-day give-and-take of trade negotiations", and reiterated that, at the moment, he only has one more quarter-point cut for his 2019 forecast. "US monetary policy can not reasonably react to the day-to-day give-and-take of trade negotiations", Bullard said in a presentation in Washington on Tuesday.

More news: Hong Kong airport on alert ahead of fresh wave of protests

"Economy-wide, US corporate profits have been falling", stated Morgan Stanley analysts in a report dated August 5.

"I think the market reaction is to be expected".

USA consumers are expected to bear the cost of duties slapped on products made in China like iPhones, laptops and televisions, while businesses continue to sit on the sidelines, avoiding making any investments.