Trump 'not happy' with Fed interest rates

Mr Trump said increased rates had resulted in a stronger dollar which put the USA at a disadvantage compared with places where central banks are holding interest rates steady.

The US dollar lost ground against rival currencies following the comments. The latter just yesterday completed the semiannual testimony to Congress on the economy, in which he reiterated the Fed's intention to continue to raise its key policy rate, the federal-funds target, at a gradual pace.

Speaking about Fed policy in his interview with CNBC, Trump said he is "letting them do what they feel is best". "No president should interfere with the workings of the Fed", Fisher said.

"I'm not thrilled", Trump told CNBC in an interview excerpt aired on Thursday.

The Fed is now chaired by Trump appointee Jerome Powell, whom Trump described as "a very good man". In particular, the Fed's most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law past year. "In fact, an argument can be made that the President's comments may skew the Committee in a hawkish direction: if a decision is a close call then the appearance of kowtowing to the President may bias them toward raising rates". Testifying before Congress this week, Powell reiterated the USA economy is humming along and should continue to do so.

Presidents have historically avoided criticizing the Fed, which is created to be independent from political interference.

Fed spokeswoman Michelle Smith declined to comment. Bloomberg's headline says Trump "trespass [ed] on Fed's independence".

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Doing so slows growth, as it raises the cost of borrowing, but can also prevent runaway inflation from damaging the economy.

The reaction to Trump's remarks in the financial markets was muted.

Indeed, overall financial conditions in the USA are largely unchanged since Trump took office in January 2017 despite the Fed's gradual tightening campaign, and looser than they were on average in 2016, according to a Goldman Sachs index.

Most notably, during the Bill Clinton administration, Robert Rubin, first as head of the National Economic Council and later as Treasury Secretary, was to refrain from pressuring the Fed on policy, a precedent that has been followed by the administrations of George W. Bush and Barack Obama.

The Fed's dual mandate is to maximize employment and stabilize prices.

It's always been speculated that the taboo of commenting on US 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. Rubin argued for that policy to be maintained in a New York Times op-ed piece previous year when the White House was mulling the choice of Yellen's successor. During the 1972 election year, Burns ran an extremely expansionary policy to ensure a strong economy to benefit Nixon's campaign, while talking tough about inflation.

The last known example of US presidential strong-arming came when George H.W. Bush was fighting for re-election.

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