Published: Fri, July 20, 2018
Markets | By Otis Pena

United States dollar down on as Trump makes fresh threats vs China

United States dollar down on as Trump makes fresh threats vs China

During an interview with CNBC recorded Thursday, Trump said Fed Chair Jerome H. Powell's plan to continue gradually raising short-term rates was undermining the administration's efforts to spur economic growth. "As usual, not a level playing field", Mr Trump said.

Trump criticized the USA central bank in comments aired Thursday, saying its course of interest rate increases counteracted his efforts at growing the economy. The president said China had harmed the U.S.by deflating its currency to suppress the price of Chinese goods and violating trade laws.

The dollar began taking a hit on Thursday after Trump suggested that the Fed's policy of raising USA interest rates was pushing up the dollar, in turn hurting American exporters. But he also told CNBC during the campaign that he is a "low interest-rate-person".

Speaking about Fed policy in his interview with CNBC, Trump said he is "letting them do what they feel is best".

The Fed had no comment.

While the USA economy has been growing robustly with unemployment under 4% and inflation in check, the Fed hasn't been a target for the administration.

President Trump looks on as his nominee for Federal Reserve chairman, Jerome Powell, takes to the podium at the White House on November 2.

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It's just managing that level of expectation and getting the confidence up with results. "Those long irons really hurt me today". "No one's going to argue with him - he did it like at Hoylake, and he was able to win there".


"You look at the euro, you look at what's going on with the European Union, they're not doing what we're doing and we already have somewhat of a disadvantage, although I'm turning that into an advantage", Trump said. 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.

Most developed-world central banks are given a degree of independence from governments so monetary policy doesn't succumb to the whims of politicians.

The rate rises, which make borrowing more expensive, are meant to head off uncontrolled price rises as the USA economy expands.

Put another way: The best way for the Fed to assert its independence is to do exactly the opposite of what Trump suggested.

The dollar relinquished gains from earlier in the day and Treasury yields dropped following the president's remarks.

Trump said the United States had been being taken advantage of by China for a long time. The released Nixon tapes revealed numerous conversations between the president and Burns in which Nixon pressures the Fed chair to keep rates low.

"I'm just saying the same thing that I would have said as a private citizen", Trump said. That episode ultimately triggered runaway inflation that took a decade to tame and required raising the Fed's policy rate above 15 per cent - more than eight times the rate's current average.

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