Monday, just 2 days before the FOMC is expected to raise fed funds rates for a 4th time this year, President Trump and his Top trade adviser ratcheted up their criticism of the Fed’s monetary tightening.
“It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!” President Trump wrote in a Tweet.
A few hours later, White House trade adviser Peter Navarro amplified that theme, calling the Fed “crazy” for having signaled, as it did in September, that it would continue to raise rates next year.
“The reason why the Fed shouldn’t raise interest rates on Wednesday is not because the economy’s slowing down, but because the economy’s growing without inflation,” Mr. Navarro said.
With inflation meeting the Fed’s 2% target and few policymakers worried about it overshooting, Mr. Navarro suggested the central bank is raising rates for the wrong reason.
“We have Zero inflation for all practical purposes, so on Wednesday, the only argument I’m hearing for the Fed to raise rates now, is that somehow they have to exert their independence from the White House,” Mr. Navarro said.
In an interview with Reuters last week, President Trump said he needed the flexibility of lower rates to support the broader US economy as he fights a growing trade battle against China, and potentially other countries.
HeffX-LTN technical outlook for the major US stock market indexes is Bearish in here.