Trump escalates his war with the Fed


President Donald Trump upended almost three decades of presidential precedent by commenting on the Federal Reserve's interest rate policy on Thursday, but at least one economist thinks the president's remarks could come back to bite him. The Fed has raised interest rates five times since Trump took office in January 2017.

'I don't like all of this work that we're putting into the economy and then I see rates going up'.

"I don't really - I am not happy about it", he said.

Speaking about Fed policy in his interview with CNBC, Trump said he is "letting them do what they feel is best".

Trump nominated Powell as Fed chairman past year to replace Janet Yellen.

Randall Kroszner, a former Fed governor, said the central bank has withstood political pressure before and will continue to do so under Powell's leadership.

Powell, nominated by Trump and confirmed by the Senate with broad bipartisan support, has a four-year term as chairman that ends in 2022.

Bloomberg's headline says Trump "trespass [ed] on Fed's independence". In emerging markets such as Turkey, the government of President Recep Tayyip Erdogan has felt no such restraint. "No president should interfere with the workings of the Fed", Fisher said.

Hoping to keep a lid on inflation as the world's largest economy gathers pace, the Fed has raised its benchmark lending rate seven times since 2015 and expects two more rate hikes this year. Before the President's comments, the pair hovered around 112.850 but subsequently dropped to 112.115 before staging a rebound as the comments were digested.

He tweeted early Friday that higher interest rates are taking away America's competitive edge with China. US central bankers project two more rate increases this year and another three hikes in 2019.

Fed spokeswoman Michelle Smith declined to comment.

After Trump's interview with CNBC was made public, Lindsay Walters, a White House spokeswoman, said the president "respects the independence of the Fed".

Unemployment stands at 4 percent, close to record lows, while the economy has continued to expand under Trump, and the GOP is pitching their economic record ahead of the midterm elections.

Mr Trump argued that higher rates put the U.S. at a disadvantage and impede faster growth.

Steady US economic growth of around 2% in the first quarter of this year and rising interest rates, at a time when the European Central bank and the Bank of Japan are keeping their rates low, helped the US dollar climb to its highest level in a year in July.

When Robert Rubin led President Bill Clinton's National Economic Council, he adopted a rule of never commenting on the Fed's actions - a policy that was subsequently followed by the George W. Bush and Obama administrations.

Business media figures immediatly expressed alarm, noting that Trump was breaking presidential tradition by publicly revealing his opinion about the Federal Reserve, threatening the independence of the institution.



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