Published: Fri, July 20, 2018
Markets | By Noel Gibbs

Markets fall after Trump criticises Fed rate hikes

Markets fall after Trump criticises Fed rate hikes

President Trump on Friday took his second swipe in two days at the Federal Reserve's interest rate hikes, alleging the central bank is taking away the country's competitive advantage, which sent the USA dollar lower. "We have been ripped off by China for a long time". Add Donald Trump as an interest to stay up to date on the latest Donald Trump news, video, and analysis from ABC News.

Trump said shortly after his first meeting with Chinese President Xi Jinping in 2017 that the country had stopped manipulating its currency because of his election. "We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently".

The threat to place tariffs on all Chinese goods sent to the U.S. would effectively end the tit-for-tat trade battle between the two nations, as Chinese imports from the USA are a comparatively small $129.9 billion.

The Fed has been set on a slow and steady path of interest rate hikes over the past two years, leading economists to wonder if the central bank could tamp down some of Trump's promised economic growth. Erdogan has clashed with his central bank, asserting his notion that higher interest rates feed inflation rather than restraining price rises. "I'm not doing this for politics", Trump said in an interview with CNBC. Now, even if the Fed pauses its rate-hike campaign for valid economic reasons, it could look politicized.

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WASHINGTON-President Donald Trump on Thursday cast aside concerns about the Federal Reserve's independence, saying he was "not happy" with the Fed's recent interest rate increases. He did not give CNBC any comment on Trump's interview.

"The president's comments may skew the committee in a hawkish direction", Michael Feroli, chief United States economist at JPMorgan Chase & Co, wrote in a note to clients following Trump's criticism of the central bank in an interview on CNBC. According to the Federal Reserve Act, a Fed chairman, or any Fed governor, can only be removed from office before his or her term ends "for cause", which isn't defined.

Stock markets in Europe have fallen sharply after President Trump said he was willing to impose tariffs on all Chinese goods imported to America.

Ex-Dallas Fed President Richard Fisher told CNBC that Trump was off course in his criticism of the Fed, which is headed by Trump appointee Jerome Powell.

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Last week, Powell said in an interview with American radio program Marketplace that he didn't expect to face pressure from the White House.

"China, the European Union and others have been manipulating their currencies and interest rates lower, while the raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge".

The Fed slashed short-term rates to near zero in the wake of the 2008 financial crisis.

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