Published: Fri, October 19, 2018
Economy | By

What Trump Says Is the Biggest Threat to His Presidency

What Trump Says Is the Biggest Threat to His Presidency

Despite sharp criticism from U.S. President Donald Trump for raising interest rates, Federal Reserve policymakers remain generally united on the need to raise borrowing costs further, according to minutes from their most recent policy meeting.

As well as making life more hard for USA 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.

"This gradual approach would balance the risk of tightening monetary policy too quickly, which could lead to an abrupt slowing in the economy and inflation moving below the Committee's objective, against the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances", the minutes said.

Every Fed policymaker backed the central bank's September decision to raise the target policy rate to between 2 percent and 2.25 percent, according to minutes of the Sept. 25-26 meeting, published Wednesday.

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

Fed Chairman Jerome Powell has said the central bank will monitor interest rates to avoid raising them too quickly, which could hamper USA growth.

USA stock markets, which had largely expected a "steady as you go" statement, moved slightly higher but remained loss-making after the update, which stressed a continuation of the Fed's "gradual" approach to rate rise policy.

Treasury yields were little changed.

"Because the Fed is raising rates too fast". Mnuchin said Trump's complaints simply reflected his preference for low interest rates.

USA presidents usually remain silent on such issues in respect toward the Fed's independence.

The minutes did note concerns about the impact of Trump's get-tough trade policies, citing business contacts who expressed worries about lost markets and rising prices for steel and aluminum.

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.

At the September meeting, the Fed boosted its key policy rate for a third time this year.

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

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