'My Biggest Threat Is The Fed'

Daniel Fowler
October 19, 2018

But, amid brisk American expansion, some Fed policymakers also warned of looming dangers to the world economy, such as the potential for a strengthening U.S. dollar and possible contagion from sputtering emerging markets, according to minutes from the Fed's most recent meeting three weeks ago. Officials have penciled in one more rate increase this year, and three in 2019.

Trump acknowledged that the central bank is independent, "so I don't speak to them", but then leveled direct criticism at Fed Chairman Jerome Powell, who he said should be slower on interest rate rises.

Many economists view current growth of around 3 per cent and unemployment of 3.7 per cent, which is near a 50-year low, as unsustainable and likely to lead to higher inflation.

Participants in the FOMC rate-setting committee "generally anticipated that further gradual increases" in short-term borrowing costs would be consistent with the kind of continued economic expansion, labor market strength, and firm inflation that most anticipated, the minutes showed.

"My biggest threat is the Fed, because the Fed is raising rates too fast", he told FOX Business Network's Trish Regan.

The Fed has been raising interest rates since 2015 and after the rate hike last month it stopped describing the stance of monetary policy as "accommodative", meaning that it no longer thought the level of interest rates was stimulating the economy.

But Trump's complaints don't seem to have fazed the honchos at the world's most important central bank.

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In the minutes it says "a couple" of policymakers stated that they would not be in favour of adopting a restrictive policy stance without "clear signs of an overheating economy".

Markets fear currency crises in Turkey and Argentina and other emerging market economies could spread beyond their borders - something that could be sparked as investors pull out to take advantage of higher rates in the United States.

"The more the economy's potential growth increases, the more gradual we can be in our removal of monetary policy accommodation", Quarles said.

The Trump administration has already imposed tariffs on $250 billion worth of Chinese goods, which have been met with countermeasures out of Beijing.

Compared to the minutes of Fed's previous meeting held in August, the September minutes appeared to show less discussion around the prospects that a recession might be lurking around the corner.

Wall Street, which had struggled through much of the day, closed slightly lower, with stocks paring losses after the minutes' release.

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