President Donald Trump seems to be at loggerheads with the US Federal Reserve over the Fed’s interest rate policy and has blamed the central bank for hurting the US economy and stock market.
Trump has made no secret of his disdain for the Fed’s recent interest rate increases and its effort to slim down its massive portfolio of government-backed securities.
The president has blamed the Fed for what he feels the “slowing economic growth” in the United States and has criticised its chairman, Jerome H Powell, who he had handpicked for the top central bank job.
Trump decried the increases as impediments to growth as he pushed for at least 4% economic growth.
The US economy, which slowed more than initially thought in the fourth quarter, is expected to slow further over the next three years. This may pose significant challenges to Trump as he seeks re-election to the White House in 2020.
In a recent tweet, Trump said: “Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3% GDP and the Stock Market, would have both been much higher and world markets would be in a better place!”
Prior administrations have taken care not to comment on Fed policy, but Trump has railed repeatedly against the independent US central bank’s rate hikes.
The Fed last week kept its target range for short-term rates at 2.25% to 2.5%, and projections showed most policymakers do not see any rate hikes this year, a downgrade from December when the median forecast was for rates to rise to 2.9%.
After raising rates for five consecutive quarters, the Fed abruptly changed course this year and said earlier this month that it foresees no additional increases in 2019.
The change in the Fed’s tone lines up with other major central banks, which have recently turned dovish, influenced by increasing concerns of a global economic slowdown and political uncertainties like Brexit and the US-China trade war.
The Fed brought a three-year rate-hike cycle to an abrupt end as it abandoned projections for any further increases in borrowing costs this year and said it would stop shrinking its bond holdings in September.
The central bank bought bonds in the aftermath of the financial crisis to stimulate the economy but started letting those holdings run off in 2017 in an effort to put its policy back on normal footing.
Shortly after the Commerce Department said the economy slowed more sharply at the end of last year than previously reported, Trump blamed the Fed for “mistakenly” raising rates last year.
Obviously, President Trump wants the Federal Reserve to cut interest rates to guard against a slowdown in global economic growth, blaming the central bank for hindering economic growth while denying any suggestion of a looming slowdown.
But some Fed policymakers and other economists have blamed the US-China trade tensions or tariffs under the current administration as a major factor behind the slowdown and market swings.
LEAVE A COMMENT Your email address will not be published. Required fields are marked*
Freedom to fly key to aviation industry growth
National Day an occasion to instill values of sacrifice and loyalty to the homeland
'Commemorate goodness and human achievements'
'Our economy is stronger today than it was before the blockade'
Lebanon’s next government should focus on health
The “yellow vests” in France: not an isolated phenomenon
NZ volcano eruption: cruise line sees it as an unforeseeable event
Fighting the diseases of want and plenty