USA dollar weakens after Trump slams Fed rate hikes

Wall St. rises on trade optimism pares gains after Trump Fed commentsMore

Wall St. rises on trade optimism pares gains after Trump Fed commentsMore

The rand firmed more than 1% in early trade on Tuesday, matching gains by its emerging market peers as criticism of Federal Reserve rate hikes by US President Donald Trump hurt the dollar and revived demand for some risk assets. Trump said to Reuters about Powell.

In a confirmation hearing past year, shortly after Mr. Trump nominated him to the position, he told senators he expected the Fed to continue raising interest rates in the near term.

"I'm very concerned, especially given this very divisive and highly politicised environment, that bringing the Fed into that environment could complicate the Fed's communications [to the public], its support in the Congress and among the American people", said Donald L Kohn, who spent 40 years at the Fed and retired as its vice chairman in 2010. "The other countries are accommodated".

In developed economies, central banks are independent of political control.

Trump told Reuters that he was "not thrilled" by Powell's decision to raise interest rates and would continue to criticise the Fed if interest rate hikes continued.

The president said that he was told by advisers that Powell liked "cheap money" before he chose him to run the Fed, according to the Wall Street Journal.

"The dollar has slipped in response to President Trump's comments, though the underlying upward trend remains intact", VTB Capital economist Neil MacKinnon said on Tuesday.

Trump used similar language when he criticized the Fed in a July interview with CNBC.

Federal Reserve chairman Jerome Powell has raised rates five times over the span of Trump's administration thus far, including twice this year.

The Fed declined to comment, but former Fed officials expressed alarm at Trump's repeated criticism.

"What Trump is anxious about is that the Fed has, in my own words, growth phobia", Stephen Moore, a Republican economic commentator who advised Mr. Trump during the 2016 presidential campaign, told the Wall Street Journal. For example, the current Federal Reserve policy is calling for relatively small increases in rates that have been spaced out over what is now almost a three-year period and these increases have been so modest that it can't really be said that they've had a major negative impact on economic growth.

Financial market analysts doubt current Fed policy makers are likely to be cowed by Trump's outbursts over their policy choices.

In addition to picking Powell as Fed chair, Trump has appointed one other board member, Randal Quarles, and has nominated three others to the panel, two of whom are expected to be confirmed soon by the Senate.

"I am not happy about it".

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