Fed is set to leave rates alone as trade war raises anxiety

WASHINGTON — The Federal Reserve will meet this week to assess an economy that has just enjoyed a healthy spurt of growth but faces a flurry of trade fights pushed by President Donald Trump that could imperil that growth over time.

If those concerns weren't enough, Trump has openly expressed his displeasure at the Fed's interest rate increases — something no president has done publicly in more than two decades.

No one expects the Fed to announce a rate increase when its latest policy meeting ends Wednesday. But the central bank is widely expected to set the stage for tightening credit again in September for a third time this year and then likely raise rates once again by December. This year's rate increases follow three hikes in 2017 and one each in 2015 and 2016.

The central bank's rate increases — to a still-low level — reflect the economy's resilience and are intended to prevent growth from overheating or inflation from accelerating too high. But higher rates make borrowing costlier for consumers and businesses and can weigh down stock prices. Trump has made clear he has little patience for the Fed's efforts to restrain the economy to control inflation.

“Tightening now hurts all that we have done,” Trump tweeted earlier this month, a day after he said in a television interview that he was “not happy” with the Fed's rate increases.

Some of Trump's economic advisers, notably Treasury Secretary Steven Mnuchin, have tried to strike a reassuring note that the White House doesn't want to interfere with the Fed's policymaking.

“We as an administration absolutely support the independence of the Fed, and the president has made it clear that this is the Fed's decision,” Mnuchin said on “Fox News Sunday.” “The market expects interest rates to keep going up. So, the only question is how far and for how long? And we think the Fed will be very careful in managing the economy.”