Trump escalates his war with the Fed

Trump threatens tariffs on all $500 billion of Chinese imports CNBC

Reuters

Mr Trump said increased rates had resulted in a stronger dollar which put the USA at a disadvantage compared with places where central banks are holding interest rates steady.

President Donald Trump has threatened tariffs on all Chinese goods imported by the US. The US should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. "But at the same time I'm letting them do what they feel is best", he said.

Trump nominated Powell as Fed chairman previous year to replace Janet Yellen. "In fact, an argument can be made that the President's comments may skew the Committee in a hawkish direction: if a decision is a close call then the appearance of kowtowing to the President may bias them toward raising rates". Low interest rates reduce the costs of borrowing money and fuel economic expansion, but risk spurring rampant inflation and financial market bubbles.

The comments raised the spectre of President Richard Nixon's pressure on the Fed in the 1970s, which led to economically damaging stagflation.

Mr. Powell argues that the economy is strong enough to handle higher rates after the rates were kept artificially low to help the recovery from the Great Recession of 2007.

But one JPMorgan economists thinks Trump's public desire for lower interest rates could actually backfire. Is a currency war coming?

Treasury Secretary Steven Mnuchin heads to Buenos Aires Friday for two days of talks with G-20 counterparts where he will likely face questions about the U.S.'s dollar policy and whether he sees the Fed as independent.

"A good sign of proof there is who he has been naming to the open board spots at the Fed", he said.

Israeli parliament passes law banning groups critical of Palestine policies from schools
Israel also made a decision to reduce the Gaza fishing zone from six to just three nautical miles. Israel says its use of live fire is necessary to defend its borders and stop infiltrations.


"Now I'm just saying the same thing that I would have said as a private citizen", he said, asserting that he didn't care about precedent.

Trump said in an interview with CNBC on Thursday that a strong dollar puts the United States at a disadvantage, adding that the Chinese yuan "was dropping like a rock".

Still, Wall Street took notice of the president's apparent desire for a weaker dollar.

"Uncertainty over the White House's dollar policy will certainly sow renewed seeds of doubt into global investors", Viraj Patel, foreign exchange strategist at ING, wrote in a report.

But current and former Fed officials didn't sound overly concerned about the commander-in-chief's perspective.

When asked about the stock market possibly falling if the United States imposes duties on such a large amount of goods, Trump told CNBC: "If it does, it does".

Mr Trump appears ready to blame the Fed for trying to slow down a booming economy he wants to make a centerpiece of the midterm elections. He still declined to nominate her for a second term as Fed chair, choosing Powell instead.

In an interview with CNBC broadcast this morning, Trump said, "We're down a tremendous amount", referring to the trade imbalance between the USA and China.

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