President Trump’s criticism of the Federal Reserve on Thursday came as a shock to traders, driving down U.S. interest rates, the U.S. Dollar and stocks.
Trump said he was not thrilled the Fed was raising rates. He told CNBC’s Joe Kernen, “Because we go up and every time you go up they want to raise rates again. I don’t really – I am not happy about it. But at the same time I’m letting them do what they feel is best.”
Trump said he’s concerned that the timing may be poor and that it will put the U.S. at a “disadvantage” while the Fed’s counterparts like the European Central Bank and the Bank of Japan maintain loose monetary policy.
Trump also acknowledged that his comments are unusual but said he doesn’t care.
“Now I’m just saying the same thing that I would have said as a private citizen,” he said. “So somebody would say, ‘Oh maybe you shouldn’t say that as president.’ I couldn’t care less what they say, because my views haven’t changed.”
“I don’t like all of this work that we’re putting into the economy and then I see rates going up,” he said.
Trump’s comments are facing criticism. However, the criticism doesn’t seem to be centered on what he said, but rather on the fact that he called out the Fed.
CNBC said, “The Fed’s independence from political interference has been a hallmark of its existence, so Trump’s remarks have little precedent.”
Former Dallas Fed President Richard Fisher told CNBC that Trump is out of line.
“One of the hallmarks of our great American economy is preserving the independence of the Federal Reserve. No president should interfere with the workings of the Fed,” Fisher said. “Were I Chairman Powell, I would ignore the president and do my job and I am confident he will do just that.”
U.S. Treasury Markets
Treasury yields edged lower on Thursday after President Trump said he disagreed with Fed policy on interest rates and objected to a strong dollar.
The 2-year Treasury note was at 2.58 percent, slightly lower than where it was when Trump made the comment, but it was well off its high of the day, 2.63, a 10-year high. The benchmark, 10-year yield dipped temporarily to 2.83 percent after the interview, but rebounded back to 2.84 percent.
This article was originally posted on FX Empire
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