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Trump criticizes Federal Reserve again

Since becoming US president, Donald Trump has not been shy to dispense with convention. Criticizing the Federal Reserve is one such area he has crossed into, particularly when it comes to the raising of interest rates.

US President Donald Trump says the US Federal Reserve should be more accommodating of his economic policies, in his latest criticism of the US central bank.

During his presidency, Trump has broken with the long-established presidential convention of abstaining from criticizing the Federal Reserve, and in his latest comments to the news agency Reuters, he repeated earlier criticisms regarding interest rate hikes.

"I'm not thrilled with his raising of interest rates, no. I'm not thrilled," he said, referring to Fed chief Jerome Powell.

Suggesting that other countries are benefitting from central banks acceding to their governments' wishes during an era of trade tensions, Trump said: "We're negotiating very powerfully and strongly with other nations. We're going to win. But during this period of time I should be given some help by the Fed. The other countries are accommodated," he said.

Read more: Central banks and the question of independence

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US economic numbers are good, but are they sustainable?

The Fed has increasingly tightened its monetary policies this year, raising interest rates twice. Since 2015, they have been slowing raising rates following six years of historic lows in the wake of the financial crisis. With consumer price inflation rising in the US and unemployment at its lowest level in 20 years, another hike is expected next month.

Independent, on my terms

Independence from political interference has been an established plank of central banking in the US for several decades, but when asked if he believed in the Fed's independence, Trump replied: "I believe in the Fed doing what's good for the country."

The Federal Reserve — headed by Powell, who was appointed by Trump earlier this year — did not initially respond to the latest Trump remarks.

However, when Trump criticized the Fed last month, Powell said the Fed had a "long tradition" of political independence and that no one in the Trump administration had said anything to give him cause for concern on that front.

"We're going to do our business in a way that's strictly nonpolitical, without taking political issues into consideration, and that carries out the mandate Congress has given us," he said.

The dollar dipped slightly in Asia on the back of the Trump comments but analysts doubt that the Fed are likely to be influenced by the US President's criticism.

"I doubt these comments move the needle for Powell and his colleagues, but it certainly sends a strong signal to those candidates interested in vying for one of the Fed Board's many open seats: favor easy money policy or find another job," Guy LeBas, fixed income strategist at Janney Montgomery Scott, told Reuters, referring to the fact that there are currently four seats available on the Fed's seven-member board.

Back to China

In the same interview, Trump also stepped up his criticism of China, ahead of the expected resumption of US-China trade talks later this week.

With an additional $16 billion (€14 billion) of US tariffs on Chinese goods due to come into effect on Thursday — taking the total US levies on Chinese goods to $50 billion, with a further $200 billion to follow — Trump accused the Chinese of manipulating their currency to order to deal with the US tariffs.

"I think China's manipulating their currency, absolutely. And I think the euro is being manipulated also," Trump said.

"What they're doing is making up for the fact that they're now paying...hundreds of millions of dollars and in some cases billions of dollars into the United States Treasury. And so they're being accommodated and I'm not. And I'll still win."

aos/hg (Reuters, AFP)

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