Mnuchin: Trump respects Fed but likes low interest rates

Mnuchin: Trump respects Fed but likes low interest rates

Mnuchin, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Bali, also said that Chinese officials had told him that they did not want to see a further depreciation of the yuan's exchange rate, an issue that the USA has been very concerned about.

Kevin Hassett, the head of Trump's Council of Economic Advisers, said the president is expressing his views on monetary policy, but he isn't trying to "politicize" the Fed. Three have PhDs in economics and three have law degrees.

The Fed's policy has diverged to some extent from other major global central banks, with the European Central Bank yet to raise rates since the Eurozone crisis.

"When you talk about economies, our economy is far better than that". That comes after a big tax cut enacted last December.

As the Federal Reserve tightens monetary policy with its steady pace of interest rate hikes, President Donald Trump continues to criticize the central bank.

"The president likes low interest rates".

Higher interest rates likewise make bonds more attractive than riskier equities, and the 10-year Treasury bond yield has jumped above three percent this week. Lower borrowing costs meant higher corporate profits. But we have actually-we're paying interest.

Still, Mr Trump said of Fed Chairman Jerome Powell, "I'm not going to fire him". The Fed's job is to ensure nominal stability. "The president is not dictating policy to the Fed.They are independent".

"The US equity bloodbath is taking no prisoners in Asia as a sea of red greets investors at the open, as equity deleveraging and liquidation intensifies", he said. "We just try to do the right thing for the medium- to long-term for the country". We've got Donald Trump tweeting about whatever crosses his mind at a given moment; we've got the news media and the political world reacting to Trump and to each other, consuming vast amounts of intellectual oxygen; we've got outrage and ranting emanating from all over the political and geographical maps. "They have to set rates today with an eye toward where core inflation is going to be 12 to 18 months out", he said. "The real question is not whether the Fed should be raising the interest rates from where they are now, but how far and how fast should they raise interest rates".

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"The markets are bringing up their expectations for growth, and have been bringing them up all year", Perli said. The Fed's main interest rate, the federal funds rate, now stands between 2 and 2.25 per cent.

Powell's goal is to extend the second-longest US economic expansion on record by moving interest rates up just quickly enough to prevent overheating, but not so rapidly that the central bank chokes off growth.

Gradual rate increases - moving the overnight federal funds rate over the next year and a half or so from between 2 and 2.5 percent now to around 3.4 percent - would slow the economy a bit, but keep inflation in check during a record-setting era of recession-free growth spanning the Obama years and Trump's first term. "That doesn't seem especially surprising".

USA stocks fell sharply on Thursday amid fears of rapidly rising interest rates and a possible global economic slowdown.

Mnuchin's calm was echoed by US Federal Reserve officials and other global policymakers as the fall in US equities extended to Asia yesterday, with benchmarks from Tokyo to Hong Kong seeing declines above 3%.

"I think we don't have to go as fast", Trump reportedly said.

Some of his former advisers said they believed Trump's criticisms of the central bank were warranted.

The president's remarks were quickly qualified by National Economic Council Director Larry Kudlow, who said the Fed was "on target" in policies that were responding to a strong economy. "Where is the inflation that they are fighting?" Simply put, stocks are sinking as Treasury rates spike. That's good news for savers and investors looking for more income. "It is doing well", Trump said.

"I wonder today whether Trump really has some buyer's remorse with respect to selecting Powell as his Fed chairman, because that was a unusual pick", Moore said.

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