"They raised rates too soon, too often, & tightened, while others did just the opposite", Trump tweeted Friday, adding that the Fed "doesn't have a clue!" That saw the 12-month rate hold steady at 2.1%.
Powell said any regulatory review of the recently announced project should be "patient and careful". Although the bank's preferred measure of price pressures, the personal consumption expenditures price index, has been stuck in a 1.5%-to-1.6% range for much of 2019 after falling late previous year.
But with unemployment at close to record lows and the USA economy showing continued strength, the Fed left rates unchanged at it's last meeting. Meanwhile, interest rate futures appeared to price in greater odds of an aggressive rate cut of half a percentage point in July.
Above: Dollar Index shown at daily intervals.
Fed policy makers changed their plan to continue raising borrowing costs this year after prospects for global growth deteriorated, trade tensions flared and inflation showed signs of weakening. But over the last decade, the Federal Reserve has been banging the inflation beehive with a baseball bat and the bees haven't come out.
The weak dollar also sent the price of gold rallying 2 per cent to sit around US$1,420 an ounce.
Federal Reserve Chairman Jerome Powell reiterated on Wednesday that he would serve out his full four year term, despite continued criticism from President Donald Trump-the man who appointed him. The Fed Funds rate is now 2.5%.
'It appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook, ' Powell said. "Sterling has galloped over 100pts higher since Powell re-affirmed the bond market's desire for rate cuts". On the positive side, buyers followed through to the upside after yesterday's surge was fueled by dovish comments from U.S. Federal Reserve Chairman Jerome Powell.
If a Fed rate cut as a direct result of the US-China trade war was in question, it should be fully answered today. On average, the economy has added 172,000 nonfarm payrolls per month between January and June.
The CPI data is going to drive Treasury yields, and yields will drive the U.S. Dollar. Markets expect those figures to reveal a notable deceleration in the pace of growth for last quarter.
Powell indicated during his prepared remarks before Congress Wednesday that a rate cut is impending due to worldwide economic turmoil. "This doesn't suggest that the Fed is seriously contemplating the 100bp of rate cuts that financial markets are now expecting by the end of 2020".
"If we had a Fed that would lower interest rates, we'd be like a rocket ship", he told reporters last week. Although he expected continued USA growth, he warned of economic weakness in other major economies, and a downturn in business investment driven by trade war worries.
Time to move your money?