Trump says Fed 'out of control' but won't fire Powell

Jeannie Matthews
October 12, 2018

The President said this week he prefers lower interest rates but added he would not speak directly to his Fed chairman appointee Jerome Powell, preferring instead to remain hands-off.

"We are getting into that zone where the typical mortgage payment is increasing much faster than incomes, and that's going to put a brake on some markets", said Aaron Terrazas, a senior economist at the real estate site Zillow. "They're so tight. I think the Fed has gone insane", he said.

The president has been publicly criticizing the central bank since July for interest-rate increases and declared he was "not happy" in September after the third rate hike of the year.

Add it all up, and it means the world's most savvy investors are betting that the USA economy will keep growing at a healthy clip, without inflation emerging, but that the Fed will have to keep raising rates well above current levels in order to prevent that inflation. "But I really disagree with what the Fed is doing, okay?" he said.

Earlier on Tuesday, White House economist Kevin Hassett said the administration respects the Fed's independence and pointed to Trump's nominees to the central bank as evidence of its non-partisan approach to the setting of monetary policy.

One former Treasury official said while Trump's comments are unusual, they don't appear to be changing the Fed's direction.

Fed Chairman Jerome Powell is aiming to extend the second-longest US economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth. Both have suffered sharp losses in recent days as investors have cashed in gains. "I think the Fed is far too stringent, and they're making a mistake, and it's not right".

"He has never attacked the Fed's plan or strategy", Kudlow told reporters on the White House lawn Thursday, speaking before Trump's Oval Office comments. "He is giving his opinion, and it's an informed opinion".

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Video showed the military dropping supplies from helicopters in places and a large Red Cross ship docked at a port in the region. Eight victims in black body bags were arranged in a row at the crumpled neighbourhood of Balaroa, destined for a mass grave.

Despite last night's sell-off, the S&P 500 would still need to more than double its losses.

"The four per cent drop in the S&P 500 so far this week suggests that investors are starting to factor in the prospect of the USA economy slowing in response to tighter monetary policy", he wrote in a research note on Thursday.

The unemployment rate in September dipped to 3.7 percent, a level not seen in almost half a century, while an inflation report on Thursday indicated the pace of price increases remained under control around the Fed's target.

International Monetary Fund (IMF) managing director Christine Lagarde.

The US and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months. And I have a lot more to do if I want to do it and I don't want to do, but they have to come to the table.

The Fed is expected to raise interest rates at least three times in 2019, up from the two hikes that it forecasted in December.

Stocks are in the midst of a scary October slump, sliding sharply because investors are anxious about rising interest rates.

But, crucially, the higher long-term interest rates don't seem to be driven by expectations that inflation will soar higher.

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