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President Donald Trump is planning to align the US Federal Reserve Chairman, Jerome Powell, to be the man of the fall if the US President's trade and fiscal policies fail.
In a series of comments over the past two days Trump has attacked the Fed to raise interest rates and reduce its efforts to reduce the US trade deficit.
"He is incriminating someone else if things do not go according to plan," Mark Spindel said. , founder and chief investment officer of Potomac River Capital, Washington
The Fed has raised rates five times since Trump took office in January 2017 and has tentatively scheduled two additional increases for this year. It also reduces the support it brings to the economy by gradually reducing its holdings of Treasury bills and mortgage bonds.
While Japanese and European authorities maintain rates close to zero, investors have increased the value of the dollar against the yen. euro. This has made American products less competitive. Trump said that he thinks it's unfair.
"The United States should not be penalized because we are doing so well," Trump said Friday. "Tightening now hurts everything we did."
The president, who launched tariff battles with most major US trading partners, also lambasted China and Europe to keep their currencies weak in order to gain an advantage. exporters
Much of Trump's anger with regard to the Fed seems to be targeting the impact that interest rate hikes from the central bank have had on the dollar. Despite the depreciation of Trump, the US dollar is about 5% higher than it was when Trump imposed tariffs on steel and aluminum imports on March 23.
Mick Mulvaney, Trump's budget director for not having acknowledged that President's policies can allow the economy to grow faster without boosting inflation. "Every time things start to improve, the Fed pulls the brakes," he told Fox News on Friday.
The President's comments drew attention during a week in which he faces increasing pressure on his relations with Russian President Vladimir Putin, after the two leaders met on Monday. Helsinki. Trump has been criticized for his lukewarm support at a press conference with Putin for the discovery by US intelligence agencies that Russia was involved in the 2016 elections.
It is not uncommon for politicians to blame the Fed when things go wrong. According to Powell, the Trump explosion comes at a time when the economy is "really in a good position."
Trump's unemployment rate dropped to 4% from 4.8% the month he was sworn in. and some economists predict that gross domestic product grew about 4% in the last quarter, double the pace in the first three months of the year. The Commerce Department's first estimate for the second quarter's GDP is expected to be released on Friday.
Trump told CNBC in an interview broadcast Thursday that he was "not thrilled" by the Fed's rate hikes
. happy about it, "said the president." But at the same time, I let them do what they believe to be the best. "Trump also called Powell, whom he named to succeed Janet Yellen, "a very good man."
Powell declined to comment when approached by journalist in Buenos Aires, while he was gearing up for weekend meetings with finance ministers and central bankers of the United States. Group of 20 Economies
The President is Limited in Direct Pressure That He Can Exercise on the Head of the Fed.Designed by Trump and confirmed by the Senate with broad bipartisan support, Powell has a four-year term as president ending in 2022. According to the Federal Reserve Act a Fed chairman, or any Fed governor, can not be removed from office until the end of his term "for cause" , which is not defined.
The President's Attacks against the Fed's rate hikes and the recent strengthening of the dollar point to an inherent contradiction at the heart of its economy. While he's trying to reduce the US trade deficit by imposing tariffs on imports, his tax cuts are boosting the federal government's red ink, exerting upward pressure on interest rates and the dollar. In these policies, "said Joachim Fels, global economic advisor at Pacific Investment Management in Newport Beach, California
and this leaves Powell and the Fed vulnerable if they were to go through.
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