Can Trump bend the Fed to his will?

Jeannie Matthews
August 22, 2018

In developed economies, central banks are independent of political control.

FILE PHOTO: U.S. President Donald Trump looks on as Jerome Powell, his nominee to become chairman of the U.S. Federal Reserve, speaks at the White House in Washington, U.S., November 2, 2017.

On Monday, Mr Trump said he was "not thrilled" that...

Trump, who spooked investors in July when he criticized the USA central bank's monetary policy tightening, told Reuters in an interview that he believed the Fed should be more accommodating.

"I asked him specifically about the independence of the Fed, and he reinforced the fact that their goal is to [address] unemployment, our economy, and that is their only objective", Scott (R-S.C.) said in an interview.

The president spoke to Reuters in an exclusive interview, the newswire said. It has also penciled in three more rate hikes in 2019.

The dollar was under further pressure today after President Trump criticised the Federal Reserve and threatened to deepen his trade dispute with China.

Powell has described the economy as "strong" numerous times this summer, but he also sees this as an opportune time to lift interest rates back to normal levels after years at historic lows, a Fed effort to stimulate the economy in the aftermath of the financial crisis and Great Recession.

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The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating.

Donald Trump's remarks are the most personal criticism of Jerome Powell's performance so far. "So I would hope the president would refrain from making comments like that".

Despite criticism from the White House, economists give the Powell-led Fed very high marks.

Beyond Trump's fiscal and trade policies, there is plenty that the Fed will need to factor in as it makes rate-hike decisions, including the state of the global economy and financial markets.

The dollar index.DXY, a measure of the greenback's strength against a basket of six other currencies, fell 0.22 percent to 95.535 after touching 95.440, its lowest since August 9.

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.

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