Fed criticism drives dollar to eight-week low against yen

Fredrick Soto
August 22, 2018

In an exclusive interview with Reuters, Trump said late on Monday he was "not thrilled" with the Federal Reserve under his own appointee, Chairman Jerome Powell, for raising interest rates and said the Fed should do more to help him to boost the economy. Trump said to Reuters about Powell.

"I'm not thrilled with his raising of interest rates, no, I'm not thrilled", he said. "I should be given some help by the Fed". Tim Scott last week, said he had not spoken to President Trump about interest rates and would remain independent from political interference, the Republican senator said.

Trump's comments come a month after he said on CNBC, "I'm not thrilled" that the federal reserve was increasing borrowing costs at the risk of slowing economic growth. The central bank is created to be independent from political interference.

The dollar, on the ascent in recent months thanks to Fed rate rises and a robust U.S. economy, stumbled after Trump's latest criticism of the central bank. However, and as long as Powell's mandates last, the all mighty US President will have to deal with higher rates and a higher United States dollars.

"The dollar has slipped in response to President Trump's comments, though the underlying upward trend remains intact", VTB Capital economist Neil MacKinnon said on Tuesday. Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates.

Federal Reserve chairman Jerome Powell has raised rates five times over the span of Trump's administration thus far, including twice this year.

Most policymakers believe the Fed can not raise rates much beyond 2.9 percent, a level they see as "neutral" for the economy, without borrowing costs really beginning to drag on growth.

Trump's criticism may have overshadowed trade war concerns, but not for Fed's officers.

"I am not happy about it".

In the middle of global trade disputes, Trump in an interview with Reuters also accused China and Europe of manipulating their respective currencies.

Trump claimed during his speech that Powell is a fan of "cheap money" yet continues to raise rates.

These increases, Trump has told advisers, could harm economic growth, making it more expensive for companies and homeowners to borrow money. The president does choose members of the policy-setting Fed Board, and in addition to Powell, he has appointed one Fed governor and nominated three others. "You know, a lot of people beat up on the Fed".

When Trump was asked if he believed in the Fed's independence, he refused to say yes, telling the reporter: "I believe in the Fed doing what's good for the country".

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