Trump Implores Fed to Forego Another Interest Rate Hike


It should be noted that interest rate hikes are favored by many of Trump's own Republican party members as U.S employment remains historically low and the US dollar has increased in value, making it more expensive for our foreign trade partners to purchase USA goods and services. "Good luck!" Trump wrote.

The president isn't wrong about the dollar, which has made modest gains against a basket of currencies, hitting a 19-month high at close on Friday.

"We believe the USA economy can sustain strong performance next year, but it can ill afford a major policy error, either from the Fed or the rest of the administration", Druckenmiller said in a December 17 op-ed published by The Wall Street Journal.

The markets are pricing in a 78.4% chance of a rate hike announcement on Wednesday, according to CME futures data, when the Fed wraps up its last two day meeting of the year. Sixty-one percent of investors do not support further rate hikes, up from 46 percent in May, the bank said in a statement Monday. In a highly unusual move for a president, Trump has publicly called the Fed and its string of rate hikes this year "my biggest threat".

Powell caused the stock market to rally November 28 when he added that he thought the Fed had taken rates to "just below" the so-called neutral rate of interest, which is a "Goldilocks" level that doesn't stimulate or contract growth. That prediction was based on the median estimate of the Fed's board members and regional bank presidents who serve on its rate-setting committee.

Behind the Fed's shifting policy is a global slowdown, a U.S. However, the USA economy grew an annualized 3.5% in the third quarter, unemployment is now at a 50-year low, and inflation is near target.

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The Fed has raised its benchmark interest rate three times this year. In addition, interest-rate sensitive sectors of the USA economy such as housing and autos are under more pressure. Similar cycles of rate increases previously have resulted in stock-market crashes or economic recessions.

"True central bank independence is the freedom to do the right thing independent of the whims of the executive", Low said. All eyes are on whether the central bank will slow down rate hikes amid expectations of an economic downturn next year.

Economist Chris Low said that would be a mistake.

Responding on "America's Newsroom", former Republican presidential candidate Carly Fiorina said President Trump "jawboning" the Federal Reserve over interest rates will not help matters.

Trump fired off two such tweets this week in the run-up to the Fed meeting.