Markets

Markets fall after Trump criticises Fed rate hikes

Markets fall after Trump criticises Fed rate hikes

Artjom Hatsaturjants, research analyst at Accendo Markets, said "market sentiment soured on President Trump criticising the Fed for hiking rates and threatening to go "whole hog" on imposing tariffs on all $500 billion of Chinese imports to the U.S., further inflaming global trade tensions and putting at risk central bank independence".

In response to a question about whether he would ever impose tariffs on $500 billion worth of Chinese goods, he said he's "ready to go to 500".

"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. And because we live in a reality where logical human behavior reigns supreme, the president has remained demure on all Fed-related topics this morning...

The administration says it wants China to end the theft of intellectual property from USA companies and curb policies that require American and other foreign businesses to hand over technology in exchange for access to the Chinese market.

"The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals", he wrote.

Trump's comments, a breach of the usual determination presidents take to steer clear of the independent Federal Reserve, come as Trump tries to boost exports by demanding trading partners lower tariff barriers.

Speaking about Fed policy in his interview with CNBC, Trump said he is "letting them do what they feel is best".

Trump said that raising American interest rates makes investment in China comparatively attractive, because China manipulates its currency by artificially devaluing it.




President Trump took a pot shot Thursday at the Federal Reserve for eyeing another interest rate hike that could slow America's strong economic growth.

So is the trade war now becoming a currency war?

The Fed raised interest rates twice this year and Mr. Powell said two more increases are likely before the end of 2018. But in the CNBC interview, the president said he was seeking to do only what's fair. Past presidents have also steered clear of commenting on USA monetary policy out of respect for the Fed's independence so the path of borrowing costs doesn't move with the whims of politicians.

The short video in English with Chinese subtitles seems created to undermine support for the trade dispute from USA farmers, key supporters of President Donald Trump, by highlighting the damage tariffs could have on American soybean exports.

"We're down a tremendous amount", Trump said in the interview, which was recorded on Thursday, about trade imbalances with China. The Fed is charged with keeping prices stable, often by raising interest rates to prevent the economy from overheating.

USA stocks finished the session mildly lower, with Trump's comments on trade and the Fed offsetting a round of mostly solid USA earnings reports.

However, many analysts doubt Trump's comments will have much impact on Federal Reserve policy or the markets. This allows it to make moves that it believes are in the best interest of the USA economy, even if those decisions are seen as unpopular by the party in power.


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