Trump Wants Feds To 'Feel The Market' Instead Of Using 'Meaningless Numbers'

Federal Reserve interest rate rise ruin Christmas investors ASX
‘Paris is burning’: Trump hails US economy while ‘outside world blowing up’

19 December, 2018

President Donald Trump slammed the Federal Reserve on the eve of a pivotal policy meeting for "even considering" another interest-rate increase, and suggested the central bank has no reason to move because inflation is low and the US currency is strong.

On Monday, the president said it was "incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike". "I don't like all of this work that we're putting into the economy, and then I see rates going up, I see China where they're - I mean look at what's happening with their currency, it's dropping like a rock".

Fed officials have also noted they are paying attention to risks such as slowing growth in Europe and in interest-sensitive sectors of the US economy.

After the Wall Street Journal posted an op-ed, which suggested that raising interest rates will hurt the economy, Trump told the feds to listen to the publication.

Trump would rather the Fed stop now but his input complicates the situation.

In my opinion, avoiding a rate hike in December will send a negative signal to markets, confirming the views that a recession is about to hit the global economy.

But it has come under intense pressure from President Donald Trump, who has warned against another hike.

Dow Jones chart Christmas 2018 interest rates
Dow Jones chart near technical support level

With U.S. markets showing signs of volatility in recent weeks, Trump has chose to stay on offense, touting every victory he can find. Many economists also expect additional increases next year although at a slower pace.

The Fed has raised its benchmark interest rate three times this year. Similar cycles of rate increases previously have resulted in stock-market crashes or economic recessions.

"Now, I'm just saying the same thing that I would have said as a private citizen", he said during the interview.

Impacts of the tightening cycle were temporarily offset by central banks around the world that were still following an easing cycle, but the global course reversed on October 1, according to Stanley Druckenmiller, a former investor and hedge-fund manager.

"Of course the President respects the independence of the Fed".

The Fed's Federal Open Market Committee, the body which sets interest rate policy, will announce its decision at 2 p.m. Wednesday.

"Allowing lower-interest borrowing to continue could keep the economy steady, bringing more people back to the labor market and potentially raising real wages even higher", wrote Jason Furman, former President Barack Obama's chief economist, in a recent Wall Street Journal op-ed. Powell will speak at a news conference at 2:30 p.m.

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