Trump Won’t Acknowledge the Independence of the Fed

Fed Chief Jerome Powell to address the world’s central bankers at Jackson Hole

US President Donald Trump criticised US Federal Reserve Chairman Jerome Powell for raising interest rates, breaking with recent presidents' practice of not commenting on the Fed's handling of the economy.

Trump said on Monday he was "not thrilled" with the Federal Reserve under his own appointee, Chairman Jerome Powell, for raising interest rates and said the usa central bank should do more to help him to boost the economy.

Treasury Secretary Steven Mnuchin recently told reporters that he had personally spoken to Trump about the central bank and that the president respects the independence of the Federal Reserve. "I'm not thrilled." Mr. Trump, in an interview, added "I should be given more help by the Fed" through more accomodative monetary policy.

Already, tighter U.S monetary policy has contributed to strain in emerging markets like Turkey, and any disruption overseas could potentially feed back into US financial markets and ultimately the country's growth trajectory. Describing policy as "accommodative" would at some point "fairly soon", no longer be appropriate, the minutes said.

The Fed is expected to raise rates twice more this year.

Meanwhile, the chart above suggests that Dollars is now trending lower, having fallen from a high of 96.60 on August 15 to its current level close to 94.72 against a basket of other major currencies.

There are a total of seven governors on the Fed Board, all of whom have a vote on setting interest rates, and Trump still has one remaining vacancy to fill should his current slate of nominees win approval from the Senate.

Bloomberg
Bloomberg

Investec economist Annabel Bishop said in a note that the Bank could strike a more hawkish tone during its scheduled meeting in September, meaning that it could flag potential increases in rates in future meetings, given the volatility in the rand. "I'm not thrilled", Trump said, referring to Powell.

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

A Fed spokesman declined to comment on Trump's remarks on Monday.

Presidents usually avoid criticizing the central bank, which is created to be independent from political interference.

"I am not happy about it". Led by Jerome Powell, a Trump appointee who took over the chairmanship in February, policy makers are gradually raising rates.

Trump selected Powell for the job a year ago from a short list of several prominent central bankers, praising Powell for his "wisdom" and "leadership" skills when he nominated him formally in November. Mr. Trump also criticized Ms. Yellen as a presidential candidate in 2016, saying she should be "ashamed of herself" for keeping interest rates low. According to Board of Governor's meeting records released after each of these increases, Powell was fully in support of the policy put in place by Yellin back in December 2015 and that he has been a strong advocate for the modest interest rate increases that have taken place since he took office earlier this year.

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Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates. Trump has abandoned that tradition this year, though his advisers have said the president is simply stating his opinion.

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