Trump lashes ‘ag­gres­sive’ Fed over in­ter­est rate hikes

Shanghai Daily - - BUSINESS - (AFP)

PRES­I­DENT Don­ald Trump re­newed his at­tacks on the US cen­tral bank yes­ter­day, say­ing it was “too ag­gres­sive” in rais­ing in­ter­est rates.

“I think they’re mak­ing a big mis­take,” Trump said dur­ing a broad­cast of Fox & Friends. While he ac­knowl­edged that higher rates helped savers, he crit­i­cized the Fed­eral Re­serve’s tac­tics.

“They’re ag­gres­sive.”

The com­ments fol­lowed his un­prece­dented crit­i­cism late yes­ter­day, when he said the Fed had “gone crazy,” and blamed the in­ter­est rate in­creases for the stock sell-off, which caused the Dow Jones In­dus­trial Aver­age to lose more than 800 points, in its worst tum­ble since Fe­bru­ary.

The rout caused a domino ef­fect world­wide, with losses spread­ing to Asia and Europe as in­vestors re­mained con­cerned about ris­ing rates, which would send more buy­ers out of eq­ui­ties and into bonds.

Trump has re­peat­edly touted

be­ing

too the spate of Wall Street records as proof of the suc­cess of his eco­nomic pro­gram, in­clud­ing his con­fronta­tional trade strat­egy, and crit­i­cized the Fed for rais­ing the bench­mark in­ter­est rate — three times this year — say­ing it would un­der­mine his ef­forts.

In fact it is largely his poli­cies that are be­hind the changes: tax cuts and in­creased gov­ern­ment spend­ing are ex­pected to juice the econ­omy, adding to the Fed’s jus­ti­fi­ca­tion to raise in­ter­est rates.

Mean­while, trade con­flicts raise costs for com­pa­nies, which could hit the bot­tom line in quar­terly earn­ings — some­thing an­a­lysts said helped prompt Wed­nes­day’s sell-off.

While Trump said ris­ing rates af­ter years near zero are “good for peo­ple with money in the bank and now they can get in­ter­est on their money for first time in a long time,” he in­sisted yes­ter­day the Fed was “mak­ing a mis­take.”

The at­tacks on the Fed are an­other ex­am­ple of Trump break­ing with re­cent norms. The Fed is an in­de­pen­dent body and pres­i­dents in re­cent decades have avoided com­ment­ing pub­licly on its ac­tions.

Fed Chair Jerome Pow­ell, whom Trump named to lead the cen­tral bank, has re­peat­edly brushed off the com­ments say­ing of­fi­cials do not pay at­ten­tion to pol­i­tics.

“This is just who we are and I think who we will al­ways be, which is, we’re a group who — we’re quite re­moved from the po­lit­i­cal process,” Pow­ell said in a re­cent in­ter­view.

“And we just try to do the right thing for the medium and longer term for the coun­try.”

In­ter­na­tional Mone­tary Fund chief Chris­tine La­garde also de­fended the Fed yes­ter­day.

Rais­ing in­ter­est rates was jus­ti­fied “for those economies that are show­ing much im­proved growth, in­fla­tion that is pick­ing up... unem­ploy­ment that is ex­tremely low,” La­garde told re­porters in Bali, where the IMF is hold­ing its an­nual meet­ing.

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