Published: Tue, December 18, 2018
Finance | By Loren Pratt

Trump pressures Fed ahead of expected rate hikes

Trump pressures Fed ahead of expected rate hikes

Nearly all 60 economists polled by The Wall Street Journal earlier this month estimated that the Fed would raise rates again this week.

"It is 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", Trump wrote, in a message sent one hour before stock markets were due to open.

"Don't let the market become any more illiquid than it already is".

You don't have to go back too far for a time when market histrionics seem to have weighed on policy. "I think what the Fed should do, is simply do what it says it's going to do, which is look at the data. rather than just saying you're going to raise rates three times in the next year - that was insane". Right now, the S&P 500 is down over the last three, six and 12 months, a backdrop that has accompanied just two of 76 rate increases since 1980.

Interest rate increases are meant to check inflation, but they can also slow the economy, adding another challenge to Trump's efforts to deliver on his promises of booming growth.

The majority of USA retail investors say the Federal Reserve should stop raising interest rates, according to a survey by Wells Fargo & Co.

Powell, who was Trump's hand-picked choice to be chairman, has stressed that the Fed will pursue its mandate of managing rates to maximize employment and stabilize prices, regardless of any outside criticism.

"I just don't think of it", said Mary Daly, president of the San Francisco Fed, in an appearance last week on PBS NewsHour.

"Not acceptable!" Trump tweeted in April.

The Federal Open Market Committee begins a two-day meeting in Washington on Tuesday and trading in interest-rate futures indicate more than a 60 percent chance of the panel's fourth hike this year.

There are also fears that the brisk pace of USA growth this year reflected something of a sugar high, with the economy artificially pumped up by tax cuts and a boost in government spending.

But some Wall Street economists and analysts said that they did not see a major shift in Fed's tightening monetary policy.

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