Trump says 'maybe' he regrets picking Fed's Powell

Drew Angerer  Getty Images President Donald Trump and Federal Reserve Chair Jerome Powell

Drew Angerer Getty Images President Donald Trump and Federal Reserve Chair Jerome Powell

President Trump lashed out at his Federal Reserve chairman, saying in a Wall Street Journal interview that the man he picked for the post past year, Jerome Powell, seems to enjoy raising interest rates.

When asked whether he regrets nominating Powell to chair the Federal Reserve, Trump said it's "too early to say, but maybe".

If that is the case, then the current half-century low unemployment rate of 3.7 percent would give no inherent reason to push interest rates past a "neutral" level.

Trump said in the interview that Powell "almost looks like he's happy raising interest rates" and that is "too early to tell, but maybe" he regrets appointing him. Trump called the Fed the "biggest risk" to the economy, due to the three times it's raised interest rates this year; it will likely do so a fourth time in December.

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Trump could try to fire Powell "for cause" under the Federal Reserve Act, though prior court decisions involving other agencies indicate disagreements over policy would not meet such a standard.

Presidents have for decades refrained from commenting on the Fed, a stance adopted to avoid compromising its independence - and its credibility with financial markets.

In addition, investors and economists view lower interest rates as catalysts for growth. Clarida, in his first meeting as vice chair in September, voted in favor of a quarter point rate increase, and now says more are warranted.

The president has made no secret of his objection to the Fed's tight policy stance but has grown increasingly outspoken as U.S. stock markets have fallen and midterm elections near.

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All the more so as Trump lobs increasingly pointed criticism at the Fed and its interest rate increases, which began under Yellen and have continued under Powell, her Trump-appointed successor. "The particular danger for him is that weakness could coincide with the 2020 election campaign, when he would be most vulnerable", says Paul Ashworth, chief US economist at Capital Economics. The US Dollar index would be the obvious play as the Dollar would weaken against all major currencies. "Every time we do something great, he [Jerome Powell] raises the interest rates". This latter tightening of policy has come alongside a pickup in USA growth.

USA growth reached 4.2 per cent year-on-year in the second quarter, its strongest pace in four years. He feels that this fluctuation in the interest rates will have a negative impact on the economy.

While the reports from the Fed's regional banks reflected a healthy United States economy, with "modest to moderate growth", President Donald Trump's aggressive tariff strategy, which has drawn retaliation from trading partners, is potentially adding fuel to inflation.

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