Trump calls US Federal Reserve his 'biggest threat'

The rand retreated early on Thursday after minutes from the US Federal Reserve's September meeting struck a hawkish tone, draining some of the enthusiasm for emerging currencies that lifted the local unit to a two-week peak.

U.S. President Donald Trump says the biggest menace to his administration is the U.S. Federal Reserve. Despite his criticism of the Fed's policymaking, Trump's picks have been seen as representing the mainstream of economic thinking about how a central bank should manage interest rates.

As well as making life more hard for United States exporters, a stronger greenback also raises the borrowing costs of many heavily-indebted emerging market economies, such as those in Latin America which have high levels of dollar-denominated borrowing.

U.S. stocks closed slightly lower and U.S. Treasury yields gained a bit as traders continued to bet on further rate hikes ahead.

The US dollar index and Treasury yields rose to its highest levels in a week on Wednesday. 10 year Treasury yield last stood at 3.210 percent, 2.8 basis points higher than the US close.

The Fed has raised interest rates three times this year as it seeks to prevent a vibrant economy from overheating.

Mike Loewengart, vice president of investment strategy at E*Trade, said: "For now, the Fed has made it clear that they are focused on their agenda despite rising presidential pressure on their rate decisions".

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"With U.S. Treasury yields beginning to creep higher again, President Trump hinting at further tariffs on Chinese goods and the CSI 300 trading at close to its lowest level since the summer of 2016, the continued risk of a fresh bout of weakness (in the yuan) can not be ignored", said Simon Derrick, chief currency strategist at BNY Mellon.

Trump followed up previous strong attacks on the Fed by complaining again that interest rates are rising too quickly.

FILE PHOTO: A jogger runs past the Federal Reserve building in Washington, DC, U.S., August 22, 2018. The next rate rise could come as soon as December. The Fed continues to debate the precise short-term neutral rate, while its median estimate for a long-run neutral rate is 3 percent.

Presidents can only remove a Fed board member "for cause" beyond policy disagreements.

Raising rates is the Fed's way of lowering the risk of runaway inflation, which happens when competition for labor and a shortage of goods in a fast-growing economy leads to big increases in wages and prices.

The minutes showed that "almost all" policymakers agreed it was time to stop saying they were stimulating the economy.

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