Trump criticizes U.S. dollar's strength, blames the Fed

Andrew Cummings
August 9, 2019

Trump has said the Fed is the biggest problem for the us economy, and is a bigger problem than China.

St. Louis Fed President James Bullard, one of the more dovish members on the central bank's policy-setting committee who's called for rate cuts, tried to diminish market expectations that the Fed was all but certain to make a big cut when it meets next in September. Earlier this week, he called China a "currency manipulator".

According to the latest Reuters poll, USA economic growth was forecast to slow to an annualised rate of 1.8% by end-2020 from the 2.1% reported for last quarter and well below the 3.1% rate in the first. Ultimately, most analysts think that the move will harm the USA economy by pushing up inflation at home as U.S. citizens need to pay higher prices for the foreign goods that they want.

Four of the board's seven seats are now occupied by Trump's appointees, while another is held by Lael Brainard, who was appointed by President Barack Obama. But with trade it's much harder to pin down precisely, even while recognizing the impact it has on creating volatility in financial markets and the economy. "Everyone wants a resolution to this", he said, adding that business investments were falling because of uncertainty. Together the four chairs served 40 years at the position of Fed chair and were appointed and reappointed by both Democratic and Republican presidents.

Trump said that the Fed's high level of interest rates in comparison to other countries was keeping the dollar too strong and making it more hard for USA manufacturers to compete.

Besides the tit-for-tat battle between Washington and Beijing, another important risk facing the US stock market is the Federal Reserve, according to Moore.

Central bank chief Jerome Powell would not commit to further loosening policy, describing the last move as only a "midcycle adjustment".

President Trump's patience is wearing even thinner when it comes to the Federal Reserve.

Trump has been relentlessly pressuring the Fed to cut interest rates in nearly daily tweets.

"It is not reasonable for monetary policy to respond to all these threats and counter-threats".

The Republican president has for months been calling on Fed Chairman Jerome Powell and Fed policymakers to lower interest rates to support the US economy.

"I think the market reaction is to be expected. I am not!" he said.

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