Published: Пт, Июля 20, 2018
Money | By Armando Alvarado

US Dollar Sinks as President Trump Hits Fed on Hikes

US Dollar Sinks as President Trump Hits Fed on Hikes

Mr Trump, in part of an interview aired by CNBC, broke with the long-established executive branch practice of not commenting on the Federal Reserve's decisions out of respect for its independence. "As usual, not a level playing field", Mr Trump said.

Still, President Trump voiced concern that the higher rates and a stronger dollar may put the USA at a disadvantage while Fed counterparts in the Bank of Japan and the European Central Bank keep rates low, maintaining loose monetary policy. "And China, their currency is dropping like a rock and our currency is going up and I have to tell you, it puts us at a disadvantage". Tariffs on another $16 billion of electronics and components are scheduled and the Trump administration has threatened to target another $200 billion of Chinese products with tariffs, a move that would raise prices for Americans and hurt China's economy. But he also told CNBC during the campaign that he is a "low interest-rate-person".

Other incidents, including President George H.W. Bush complaining about the policies of his Fed chair, Alan Greenspan, have also occurred, but the comments were far more muted than Nixon's extended pressure. Powell has said the economy is strong enough for the Fed to keep raising rates gradually. Chairman Jerome Powell has played down concerns about Trump's politicizing the Fed.

Despite this, Trump said that the Fed should keep rates low so the US economy could make up lost ground to China.

USA companies may find themselves less able to compete globally as import tariffs contribute to rising input costs, forcing them to raise prices or lower their profit margins. Both political and economic officials believe that the central bank needs to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.

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The US dollar relinquished gains from earlier in the day and Treasury yields dropped following the president's remarks. There will be many "who see that as the Fed yielding to a combative president", Conti-Brown said.

Trump defended his comments to CNBC by saying he is "just saying the same thing that I would have said as a private citizen".

Trump said he was unconcerned that his remarks might spark criticism as he was merely stating long-held personal views.

Trump regularly claims that his policies, especially tax cuts enacted by Congress last December, have created jobs and economic growth.

"Mr Trump has previously hinted at such an escalation, telling reporters two weeks ago that there was "$300bn in abeyance" after the $200bn of goods covered by the latest list, but this is his most explicit threat yet.

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