President criticises the Federal Reserve’s decision – again
US PRESIDENT Donald Trump said on Monday that he was “not thrilled” with the Federal Reserve under his own appointee, chairperson Jerome Powell, for raising interest rates, and said the US central bank should do more to help him to boost the economy.
In the middle of international trade disputes, Trump in an interview also accused China and Europe of manipulating their respective currencies.
US presidents have rarely criticised the Fed in recent decades, because its independence has been seen as important for economic stability. Trump has departed from this and said he would not shy away from future criticism should the Fed keep lifting rates.
Trump spooked investors in July when he criticised the US central bank over tightening monetary policy. On Monday he said the Fed should be more accommodating on interest rates.
“I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump said, referring to Powell. Trump nominated Powell last year to replace former Fed chairperson Janet Yellen. Trump, who criticised the Fed when he was a presidential candidate, said other countries benefited from their central banks’ moves during tough trade talks, but the US was not getting support from the Fed.
“We’re negotiating very powerfully and strongly with other nations. We’re going to win. But during this period of time I should be given some help by the Fed. The other countries are accommodated,” Trump said. The Fed has raised interest rates twice this year and is expected to do so again next month, with consumer price inflation rising to 2.9 percent in July, its highest level in six years, and unemployment at 3.9 percent, the lowest level in about 20 years.
After leaving its policy interest rates at historic lows
for about six years after the 2008 global financial crisis, the Fed began slowly raising rates again in late 2015.
Trump also said China was manipulating its yuan currency to make up for having to pay tariffs on imports imposed by Washington. “I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also,” Trump said.
“What they’re doing is making up for the fact that they’re now paying… hundreds of millions of dollars and in some cases billions of dollars into the US Treasury. And so they’re being accommodated and I’m not. And I’ll still win.”
A Chinese central bank official said yesterday that China had taken note of the US comments on the yuan, and said the two sides should communicate on the issue.
People’s Bank of China official Li Bo also said that China’s yuan exchange rate was primarily market driven and that flexibility of the yuan exchange rate had increased.
The currency has declined against the US dollar for 10 straight weeks.
“We will not pursue competitive currency devaluation and will not use the currency as a weapon to deal with trade frictions,” said Li, reiterating previous statements from Beijing.
Trump has frequently accused China of manipulating its currency, but his administration has so far declined to name China formally as a currency manipulator.
The US dollar has strengthened this year by 5.35 percent against the yuan, reversing most of its large drop against the Chinese currency in 2017.
The euro is off by about 4.3 percent against the greenback this year, beset by concerns over the pace of economic growth in the EU trading bloc and over US-European trade tensions.
Trump has made reducing US trade deficits a priority and the combination of rising interest rates and a strengthening dollar pose risks for export growth.
A Fed spokesperson declined to comment on Trump’s remarks on Monday.