Tags: Trump Administration | trump | fed | rate | hikes | cnbc

Trump Tells CNBC He's 'Not Thrilled' About Rate Hikes

(Evan Vucci/AP)

By    |   Thursday, 19 July 2018 01:11 PM

President Donald Trump criticized the Federal Reserve’s interest-rate increases, breaking with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the U.S. central bank.

“I’m not thrilled,” Trump said in expressing frustration with the central bank in an interview to be broadcast in full Friday, the financial news network reported.

“Because we go up and every time you go up they want to raise rates again. I don't really — I am not happy about it. But at the same time I’m letting them do what they feel is best,” Trump told CNBC. “I don’t like all of this work that we’re putting into the economy and then I see rates going up,” he said, according to CNBC.

The U.S. central bank has hiked rates twice this year and most experts expect two more increases by year's end. The Fed has raised interest rates five times since Trump took office in January 2017.

His remarks to CNBC weren't the first time that Trump has departed from a long-standing practice of U.S. presidents steering clear of commenting on Fed policy and the value of the dollar.

Trump's comments come after Fed Chairman Jerome Powell delivered an upbeat assessment this week to Congress on the domestic economy. The dollar had rallied for three consecutive days after Powell said the Fed will continue to tighten policy, pressuring emerging market assets and commodities. Powell told lawmakers that “for now -- the best way forward is to keep gradually raising the federal funds rate.”

Trump called Powell "a very good man" but worries that the work the administration has done will be nullified, CNBC reported.

Trump added that he was concerned that the Fed’s rate hikes may put the United States at a “disadvantage” while the Bank of Japan and the European Central Bank keep their monetary policy loose, CNBC said.

Trump admitted his comments were unusual but said he doesn’t care, CNBC reported. “Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh, maybe you shouldn’t say that as president. I couldn’t care less what they say, because my views haven’t changed,” he said.

The U.S. dollar index cut its gains after Trump’s comments that the strong dollar “puts us at a disadvantage,” while yields on U.S. Treasury securities hit session lows. U.S. stock prices briefly pared losses after Trump’s comments on interest rates.

The White House later clarified Trump’s statements.

In a statement to CNBC, the White House said: “Of course the President respects the independence of the Fed. As he said he considers the Federal Reserve Board Chair Jerome Powell a very good man and that he is not interfering with Fed policy decisions...The President’s views on interest rates are well known and his comments today are a reiteration of those long held positions, and public comments”

Fed spokeswoman Michelle Smith declined to comment, Bloomberg reported. Powell last week told American Public Media’s “Marketplace” program that the Fed has “a long tradition here of conducting policy in a particular way, and that way is independent of all political concerns.”

It wasn’t the first time in history the Fed has faced pressure from a U.S. president. But the past three administrations under Bill Clinton, George W. Bush and Barack Obama have refrained from publicly commenting on policy decisions.

Most developed-world central banks are given a degree of independence from governments so monetary policy doesn’t succumb to the whims of politicians. In emerging markets such as Turkey, the government of President Recep Tayyip Erdogan has felt no such restraint.

It’s long been speculated that the taboo of commenting on U.S. monetary policy could change under Trump, who slammed the Fed during his election campaign and has demonstrated repeatedly his willingness to flout the conventions and sensibilities of establishment Washington.

The last known example of U.S. presidential strong-arming came when George H. W. Bush was fighting for re-election. Bush’s White House pushed Alan Greenspan behind the scenes on rates and openly called on the Fed to lower its benchmark in June 1992. Greenspan did lower rates 13 times over 1991-92, but slowed the pace of cuts in the latter year, much to the White House’s annoyance.

(Newsmax wire services Reuters and Bloomberg contributed to this report).

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President Donald Trump criticized the Federal Reserve’s interest-rate increases, breaking with more than two decades of White House tradition of avoiding comments on monetary policy out of respect for the independence of the U.S. central bank.
trump, fed, rate, hikes, cnbc
Thursday, 19 July 2018 01:11 PM
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