Trump again takes Powell to task

Are Trump's attacks setting up the Fed to take the fall for a slowdown ahead of reelection bid

Are Trump's attacks setting up the Fed to take the fall for a slowdown ahead of reelection bid

"Every time we do something great, he raises the interest rates", Trump said. He said the cost of servicing United States deficit was high now largely due to federal action which has become very stringent.

"Changes in financial conditions are something that is relevant for the economic outlook", and need to be accounted for "if they are sustained", he said.

President Donald Trump announces Jerome Powell as the new chairman of the U.S. Federal Reserve in the Rose Garden of the White House in Washington on November 2, 2017. Trump has said the hikes will stifle the economy's growth. Boockvar said Powell's comments give the impression that the Fed does not appear to have a sense of urgency because he noted that there's no clear sign of inflation accelerating above the Fed's target of 2 percent.

"I don't know. I'm just saying this: I'm very unhappy with the Fed because Obama had zero interest rates", Trump was quoted in the report as saying.

And, even if subtly, the Fed is taking its own pots shots at Trump, noting that the general confidence in growth prospects also faces a few potential obstacles one fiscal policy stimulus starts to wear off. If doubts were to emerge in markets about the central bank's credibility, then investors could push up borrowing costs, ultimately slowing the economy and hurting stocks, thus meaning Trump's lobbying had backfired.

Powell was previously appointed to the Fed's Board of Governors by former President Barack Obama in December 2011.

Trump's comments on Tuesday come a week after he described the Fed as his "biggest threat", the Associated Press reported. He later said during a telephone interview on Fox News that the central bank was "going loco" for raising rates. A Reuters report yesterday said the savvy Fed chair had at least 33 meetings with members of Congress in June, July and August, according to Fed calendars, and had three times as many congressional meetings in his first seven months in office as did his predecessor, Janet Yellen.

The target range for the federal funds rate, now at 2 percent to 2.25 percent, is nevertheless still low by historical standards.

Perhaps most significantly, President Richard Nixon replaced Martin with Arthur Burns, who caved in to White House pressure for low rates in what is widely regarded as a policy mistake that fed runaway inflation.

The Fed held interest rates at ultralow levels for years in response to the 2007-09 financial crisis amid anemic growth both in the USA and overseas, and began slowly lifting rates in December 2015.

A president has never fired a Fed chairman before, and Trump has indicated that he has no intention of doing such, though recent comments have investors anxious that he's changing his mind. This article is strictly for informational purposes only.

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