US President Donald Trump told the Wall Street Journal in an interview that he was intentionally sending a direct message to Federal Reserve chairman Jerome Powell that he wanted lower interest rates, even as he acknowledged that the US central bank is an independent entity.
Federal Reserve Vice Chairman Richard Clarida, in his first major policy speech since being seated at the central bank, said more interest rate increases are likely warranted as the economy continues to gather strength. "Once you get to neutral, I think the Fed gets much more cautious about continuing to raise interest rates", she said.
Questioned on whether he has regrets for having chosen Jerome Powell to succeed Janet Yellen to lead the central bank, Mr. Trump replied: "it is too early to say, maybe".
"I'm just saying this: I'm very unhappy with the Fed because Obama had zero interest rates", Trump told the paper. The Federal Reserve has increased interest rates thrice in this year since the USA economy has agitated and it is likely anticipated to hike again before this year ends.
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. Trump had also attacked the bank last week when the share prices of United States plunged suddenly. He also labelled the Fed's rate hiking policy the greatest threat to the economy, which has been boosted this year by one of the largest tax cuts in USA history. Presidents for more than two decades mainly avoided public comments on Fed policy as a way of demonstrating respect for the institution's independence in the hope that would ultimately mean lower rates and smoother economic expansions.
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"I'm not happy with what he's doing because it's going too fast", Trump said. With regard to unemployment, the Fed expects next year to see it at 3.5-percent, the lowest it's been at any point since 1969.
"U.S. monetary policy remains accommodative", Clarida said in remarks at the Peterson Institute for International Economics. The interest rate was lowered by the bank to cope up with the recession of 2008.
The Fed raises rates by a quarter percentage point. He feels there is insufficient evidence that inflation will return, and rate hikes are unnecessary at this stage. His confirmation helped fill the ranks on the Fed's Board of Governors, which was operating with three out of potential seven members. "I'd rather pay down debt or do other things, create more jobs, so I'm anxious about the fact that they seem to like raising interest rates".
It is unclear whether the president would have the authority to remove Powell.