Published: Fri, October 19, 2018
Money | By Armando Alvarado

Despite Trump criticism, Fed policymakers see need for more rate hikes

Despite Trump criticism, Fed policymakers see need for more rate hikes

"For now, the Fed has made it clear that they are focused on their agenda despite rising presidential pressure on their rate decisions", said Mike Loewengart, vice president of investment strategy at E*Trade.

Policy makers at the Federal Reserve remain focused on gradually raising interest rates in response to strength in the USA economy and low unemployment, according to minutes of their September meeting released Wednesday.

At the September meeting, the Fed boosted its key policy rate for a third time this year.

Those remarks came in a week when the stock market, which Trump has often cited as a barometer for his stewardship of the economy, was plunging.

"My biggest threat is the Fed, because the Fed is raising rates too fast", he told FOX Business Network's Trish Regan. Right now, however, inflation rates are unusually low for an economy with such a low unemployment rate.

Trump acknowledged that the central bank is independent, "so I don't speak to them", but then leveled direct criticism at Fed Chairman Jerome Powell, who he said should be slower on interest rate rises.

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Some members of the rate-setting panel - the Federal Open Market Committee - also indicated it might be necessary to raise rates more aggressively to keep the economy from overheating.

Trump's comments Tuesday came on a day when the stock market staged an enormous comeback - its biggest one-day rally in six months - on the strength of healthy earnings from financial and health care companies and encouraging reports on the economy.

The Dow Jones industrial average on Wednesday fell 91.74 points, to 25,706.68.

But, amid brisk American expansion, some Fed policymakers also warned of looming dangers to the world economy, such as the potential for a strengthening USA dollar and possible contagion from sputtering emerging markets, according to minutes from the Fed's most recent meeting three weeks ago. Fed officials projected that rates would rise to 3.4 percent by 2020, their latest forecasts show. Despite his criticism of the Fed's policymaking, Trump's picks have been seen as representing the mainstream of economic thinking about how a central bank should manage interest rates.

"There's a couple of other people there that I'm not so happy with, too, but for the most part, I'm very happy with people".

Bullard has been the most dovish Fed official the past two years.

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