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Trump Calls for 'Big' Rate Cut: Fed Officials 'Don't Have a Clue'

Trump Calls for 'Big' Rate Cut: Fed Officials 'Don't Have a Clue'
(Drew Angerer/Getty Images)

By    |   Monday, 16 September 2019 10:17 AM

President Donald Trump once again demanded that the Federal Reserve slash interest rates in the wake of an attack in Saudi Arabia over the weekend led to a major crude oil disruption.

In a pair of tweets Monday, the president questioned whether the Fed would “ever get into the game” and said the central bank and its chairman, Jerome Powell, “don’t have a clue.” He again badgered the Fed to lower the interest rate, citing a strong dollar’s harmful effect on U.S. exporters.

“And now, on top of it all, the Oil hit,” he wrote. “Big Interest Rate Drop, Stimulus!”

After cutting the benchmark interest rate in July by a quarter percentage point, Fed officials are gearing up to cut rates again, likely by another quarter point, at their Sept. 17-18 policy meeting. Powell has defended the Fed’s independence amid the repeated attacks from Trump, the Wall Street Journal explained.

The U.S. Federal Open Market Committee meets on Tuesday and Wednesday, with a press conference by Powell scheduled to follow the release of the central bank’s statement.

The Fed’s likely action to lower its target policy rate to a range of between 1.75% and 2.00%, policymakers hope, will boost the economy by easing borrowing costs on everything from car loans to corporate bonds.

Trump also appeared to suggest that Fed officials should follow the lead of Chinese central bankers, who lack political independence, Business Insider explained.

"Producer prices in China shrank most in 3 years due to China's big devaluation of their currency, coupled with monetary stimulus," the president wrote on Twitter.

Despite the expected decision to cut interest rates by a quarter of a percentage point, investors also await the Fed’s language and new economic projections. That data will show how deeply a summer of trouble has been felt - from an intensifying U.S.-China trade war and the relaunch of crisis-style stimulus by the European Central Bank to a stream of weak manufacturing data that may hint at larger problems for the United States, Reuters explained.

“At the end of 2018 it looked like the economy was moving forward in a continued solid manner,” said David Wilcox, director for the Fed’s division of statistics and research until the end of last year and now a fellow at the Peterson Institute for International Economics.

“The risks were predominantly to the upside and it was not prominent on our radar screen or anybody’s that the trade war’s machinations would be taken to the extent that they have been...The news from abroad, by wide consensus, has been disappointing.”

More importantly, the Fed’s language and new economic projections will show how deeply a summer of trouble has been felt - from an intensifying U.S.-China trade war and the relaunch of crisis-style stimulus by the European Central Bank to a stream of weak manufacturing data that may hint at larger problems for the United States.

“At the end of 2018 it looked like the economy was moving forward in a continued solid manner,” said David Wilcox, director for the Fed’s division of statistics and research until the end of last year and now a fellow at the Peterson Institute for International Economics.

“The risks were predominantly to the upside and it was not prominent on our radar screen or anybody’s that the trade war’s machinations would be taken to the extent that they have been...The news from abroad, by wide consensus, has been disappointing.”

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Economy
President Donald Trump once again demanded that the Federal Reserve slash interest rates in the wake of an attack in Saudi Arabia over the weekend led to a major crude oil disruption.
trump, fed, rate, cut
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2019-17-16
Monday, 16 September 2019 10:17 AM
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