Can Trump bend the Fed to his will?

Donald Trump's remarks are the most personal criticism of Jerome Powell's performance so far

"Although it's premature to say that the Fed is going to be listening to (Trump's interest-rate comments), it is having the effect of profit-taking on the dollar by dollar bulls", said Samarjit Shankar, director of global strategy at BNY Mellon in NY.

Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates. He urged the Fed to avoid doing anything that could slow economic growth.

The benchmark U.S. interest rate, which plays a large role in setting borrowing costs for mortgages, credit cards, small business and auto loans, was set at a range of 0.5 per cent to 0.75 per cent when Trump was sworn in. Next time he mutters veiled threats against the Fed, some real turbulence could ensue.

Presidents usually avoid criticizing the central bank, which is created to be independent from political interference. Powell, a Republican, has repeatedly said that he believes in the Fed's independence and that he and his colleagues that set interest rates will not bow to outside pressure. In July, the president bashed the rate hikes during an interview with CNBC but also praised Powell as a good person.

Powell took over as Fed chief earlier this year. Trump has abandoned that tradition this year, though his advisers have said the president is simply stating his opinion.

U.S. President Donald Trump leaves the Rose Garden with Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve at the White House in Washington, U.S., November 2, 2017.

But that stands in contrast with the president's own words, which are often very critical of Powell and suggest the Fed should be moving in a different direction.

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"Forgetting his comments, adding fiscal stimulus this late in the cycle is. unusual, and probably makes the job more complicated for the Fed", he said.

President Donald Trump is chastising the Federal Reserve chairman yet again.

When Powell speaks Friday at an annual global central bankers meeting in Jackson Hole, Wyoming, Trump's comments may prompt some uncomfortable questions, "but do not alter the economic backdrop or Fed policy going forward", economists for RBC Capital Markets wrote Tuesday.

Almost eight in 10 economists believe the Fed's interest rate policies are "about right", according to a survey released Monday by the National Association for Business Economics. According to Bloomberg, Trump said he expected Powell to be what the news service said was a "cheap-money Fed chairman".

"I don't see their (the Fed's) actions as being particularly affected by all this", he said.

The Fed has been gradually raising interest rates since the end of 2015, with five hikes coming under Trump.

The president nominated Powell a year ago to replace former Fed Chair Janet Yellen.

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