Published: Sat, July 21, 2018
Money | By Armando Alvarado

Trump's Fed criticism prompts fears he's questioning bank's independence

Trump's Fed criticism prompts fears he's questioning bank's independence

In an interview with US broadcaster CNBC, Trump also accused the European Union of currency manipulation and criticized the US Federal Reserve for it decision to continue raising interest rates.

In a statement to news channel CNBC, the US President said, "I'm ready to go 500", alluding to the United States dollars 505.5 billion in Chinese imports into the US in 2017. "I'm doing this to do this right thing for our country".

Trump said the USA had been being taken advantage of by China for a long time.

'Of course the President respects the independence of the Fed. The president said China had harmed the U.S.by deflating its currency to suppress the price of Chinese goods and violating trade laws.

The dollar dropped against the euro as comments by U.S. President Donald Trump risked ratcheting up trade war tensions, while stocks diverged. I want them to do well.

The dollar index turned negative following the release of Trump's remarks, which were excerpted from a longer interview due to air Friday morning.

"I'm not thrilled", he said in an interview on CNBC television. He also called Jerome Powell, whom Trump nominated to lead the Fed, a "very good man".

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Packages move along a conveyor belt at the Amazon.com Inc . fulfillment center in Robbinsville, New Jersey, June 7, 2018. Amazon said it signed up more new Prime members on July 16 than any on previous day in the company's history.

Donald Trump said he was concerned about the potential impact on the United States economy and American corporate competitiveness from rising rates and a stronger dollar.

"It breaks with the consistency in the dollar messaging that we've had over the last 25 years, which has provided a strong backstop for market-determined exchange rates", said Shaun Osborne, chief foreign-exchange strategist at Scotiabank in Toronto. The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating. Past presidents have also steered clear of commenting on US monetary policy out of respect for the Fed's independence so the path of borrowing costs doesn't move with the whims of politicians.

Global markets stalled on Friday after a US threat to slap $500 billion (383 billion pounds) of trade tariffs on China and more yuan weakness, with the dollar slipping and one major benchmark of world equities ekeing out limited gains.

The dollar began taking a hit on Thursday after Trump suggested that the Fed's policy of raising USA interest rates was pushing up the dollar, in turn hurting American exporters.

The Fed has raised interest rates twice in 2018, and is expected to issue at least two more rate hikes before the end of the year. More than 70 per cent of Republican and Republican-leaning U.S. adults believe increased tariffs between the United States and its trading partners will be good for the country, according to a Pew Research Centre survey.

"So somebody would say, 'Oh, maybe you shouldn't say that as president.' I couldn't care less what they say, because my views haven't changed", Trump said.

"I really like President Xi a lot".

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