Trump pressures US Fed ahead of expected rate hikes

Analysts expect the USA central bank will raise rates at the end of its two-day policy meeting on December 19.

Those investors have a cheerleader in President Donald Trump, who slammed the Fed again in a tweet Monday for "even considering" another rate increase, laying out arguments against a hike to savor the achievement of a strong USA economy. "Take the Victory!" Trump wrote in a tweet.

The president isn't wrong about the dollar, which has made modest gains against a basket of currencies, hitting a 19-month high at close on Friday.

Trump has basked in a robust US economy, the world's biggest, even as numerous investigations engulf him and his 2016 presidential campaign and key advisers have quit his administration or been forced out.

Last week, Trump said he needs the flexibility of lower interest rates to support the USA economy as he fights a growing trade battle against China, and potentially other countries. Also, don't let the market become any more illiquid than it already is. "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".

The tweet was targeting the Federal Reserve that is expected to raise interest rates again as it was steadily doing as the economy was growing.

Dow Jones chart Christmas 2018 interest rates
Dow Jones chart near technical support level

"The criticism by the administration of the Fed is not going to stop, and it's likely to intensify", said Joshua Feinman, global chief economist at DWS in NY and a former Fed staff economist.

In September, Fed officials collectively forecast that they would raise rates three times in 2019.

Fed officials will conclude a two-day meeting Wednesday, and Wall Street traders predict almost an 80 percent chance the Fed raises rates a quarter point this week, setting them at a range of 2.25 percent to 2.5 percent. Wages are also starting to increase in the United States, stoking fears that inflation could follow if interest rates remain so low.

The Twitter outburst renewed the president's rock throwing at the central bank, which he accuses of undermining his economic agenda of tax cuts, slashed regulations and multi-front trade offensives. He blamed the Fed for October's stock-market selloff, calling the central bank "out of control, " and said that Mr. Powell seemed to enjoy raising rates.

"Uncertainties about how the economy will perform next year have ballooned", said Sung Won Sohn, chief economist at SS Economics.

US President Donald Trump said on Monday that it is "incredible" the Federal Reserve would consider raising interest rates on Wednesday amid all the problems in France and China.

  • Anthony Vega