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A spirited confrontation between Powell and the president counts "at a very high level because it affects perception," said Christopher Whalen, director of Whalen Global Advisors. "Some investors think it's important, but I think the fundamentals, especially the credit markets, are really what makes things happen."
Raising the President's awareness of the nuance that can influence the Fed's decisions could help Powell position itself. The Fed's survey of bank executives and bank executives, released on Monday, revealed slowing demand and tighter conditions for commercial and industrial lending.
Markets are no longer expecting rate increases this year, which was the case before the Powell-Trump meeting.
"I think it's mostly politics," Whalen said. "I do not think Powell or the other members of the board of governors will react to comments from a president or any other politician about monetary policy."
Although this is the first for Powell and Trump, the meetings between the presidents and the presidents of the Fed are not new.
Former President Barack Obama and former Fed President Janet Yellen have met on several occasions. In April 2016, one of them attracted attention because of the fear that Obama was worried about a rate hike that would slow down the pace of business. economy and tarnish his legacy. After this meeting, both parties said that the economy was at the center of the discussions but that there was nothing on rate policy.
Powell's criticism by Trump is notable for his very public nature. The president used his favorite megaphone, Twitter, to chastise the central bank, and leaks to the White House revealed that Trump was considering replacing Powell if the Fed maintained higher exchange rates.
Inventories were up Monday as a result of the meeting. David Rosenberg, chief economist and strategist, remarked that "anything that could give Mr. Market the feeling that the Fed will stay on this freshly paved dovish course" helps to build trust.
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