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The US Federal Reserve has steadily increased its interest rates since 2015 in light of the boom of the US economy. The key to providing money to banks is currently in the range of 1.75-2.0%. It was only Wednesday that Fed Chairman Jerome Powell reiterated that interest rates would continue to rise.
US President Donald Trump does not like this because he needs a cheap US dollar to give US companies a competitive advantage. and to reduce American goods abroad.
That is why he interfered with the monetary policy of the central bank, contrary to the tradition of Western countries. He was "not enthusiastic" about interest rate hikes by the Federal Reserve Bank, Trump said in a television interview with MSNBC.
The dollar has become cheaper after reporting in an hour of close to a cent to 1.1680 per euro. On Twitter, Trump said: "China, the EU and others manipulate their currencies and interest rates downward" while the US dollar is steadily increasing, wrote Trump . This would deprive the United States of its "great competitive advantage".
This fueled fears that the trade dispute will only turn into a currency war, said Commerzbank badyst Esther Reichelt.
To this is added the verbal exchange between Trump and Iran, which drives up the price of oil. The direct victims were European equities on Monday: most of the major indices have lost value. For example, the German stock index Dax fell 0.10% to 12,548.57.
China, the European Union and others have manipulated their currencies and their interest rates down, while the United States raises rates while dollars become stronger and stronger every day, which takes away our competitive advantage. As usual, not an equal playground …
– Donald J. Trump (@realDonaldTrump) July 20, 2018
Political influence on the Dollar rate?
Experts worried about the risk that Fed decisions would be interpreted as having political influence, said badyst Reichelt: "Any hesitation, any sign of slowing interest rates , which we will certainly do in the coming year This could be seen as a sign that the Fed is incorporating the wishes of the President into its decisions, "she said.
This applies even if decisions could be economically justified, Esther Reichelt does not badume that Trump has added to the dollar, but rather recent price fluctuations have been a short-term reaction: "However, Confidence in the independence of the Fed remains high. "
Ex-Finance Minister: United States en route to the" Banana Republic "
Clinton and the Bank's Chief Economist Lawrence Summers, have criticized Trump for his statements on Twitter. With such a statement, Trump continues to lead the United States to become a "banana republic".
– Lawrence H.
Attacking the central bank is one step closer to what appears to be a presidential strategy Summers (@LHSummers) July 19, 2018
