Thursday, 13 December, 2018


Trump takes aim at 'crazy' Fed as markets sink following USA slump

Mnuchin Says U.S. Markets ‘Correction’ Is Not Very SurprisingMore Mnuchin Says U.S. Markets ‘Correction’ Is Not Very SurprisingMore
Conrad Doyle | 11 October, 2018, 17:57

"I think our nominees have been absolutely first rate".

The Fed last raised interest rates in September and left intact its plans to steadily tighten monetary policy, as it forecast that the USA economy would enjoy at least three more years of economic growth.

Mnuchin declined to comment on Trump's latest attack on the US central bank, though he repeated that the Fed has independence.

Trump has previously voiced his displeasure with the Fed's rate hikes, saying he would rather shift his focus to the continued growth of the USA economy and creating more jobs. "The Fed is going loco and there's no reason for them to do it and I'm not happy about it". The Fed's main interest rate, the federal funds rate, now stands between 2 and 2.25 per cent.

United States long-dated Treasury yields rose again in extension of a trend over the last few weeks fuelled by solid U.S. economic data that reinforced expectations of multiple interest rate hikes over the next 12 months. At just over 2 percent, the Fed's short-term policy rate remains low by historic standards, and most indexes of borrowing costs and credit flows still regard broader financial conditions as "loose" and conducive to economic growth.

"The Fed continues to flood the market with United States dollars", he said in one tweet. He was persuaded by Treasury Secretary Steven Mnuchin that Powell, who was already a Fed governor, would be a force for stability.

Trump's public criticism of the Federal Reserve, whose chairman, Jerome Powell, Trump appointed, is a sharp departure from his recent predecessors.

During an event earlier Wednesday amid the sell-off, Trump and his top economic adviser, Larry Kudlow, said they believed the American economy was robust.

"A lot of people were concerned when the QEs were done whether the Fed would ever be able to downsize and I think the market has handled the supply very well, ' Mnuchin said".

Trump said Tuesday that the economy is enjoying "record-setting" numbers and "I don't want to slow it down even a little bit, especially when we don't have the problem of inflation". "Where is the inflation that they are fighting?"

"The markets are fraught with peril", warned Stephen Innes, head of trading at OANDA, adding there was a "horrible intersection of risk aversion" from the US-China trade conflict and rising US interest rates. Economic growth has improved, and Republicans have taken steps to cut taxes and regulations.

But in an interview with CNN in Bali, Mnuchin appeared to contradict Trump's suggestion that the Fed was partly to blame. And tech stocks got hit particularly hard.

It was his second broadside against the U.S. central bank in the last 24 hours, following a sell-off on Wall Street partly attributed to investors fully adjusting to the central bank's steady rate increases, and an uptick in particular in yields on long-term U.S. Treasury bonds that are an important, more secure alternative to stock investments.

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