Fed boss plans to continue rising rates in the aftermath of Trump attacks

US Central Bank President Jerome Powell said on Wednesday that he is pursuing the policy of raising interest rates in the wake of Donald Trump's sharp criticism of the Fed's decisions.

"Interest rates are still low by historical standards and they remain just below (…) at a level that would be neutral for the economy, that is, without stimulating or slowing down the economy. growth, "he said in a speech to the New York Economic Club, justifying further rises.

These comments, which come in the wake of strong criticism of the Republican President accusing the Fed of making a mistake by increasing its rates, were immediately hailed on the markets waiting for details on this famous neutral rate.

The specialists are very divided on what is concretely a neutral rate for a given economy. As for the United States, economists mention a rate around 3%. The key interest rate set by the Fed is currently 2.25%.

"He said the magic words, + rates are just below neutral +", that's what made the market jump, reacted Gregori Volokhine, an analyst at Meeschaert Financial Services.

"By clearly and transparently explaining our decisions, we are pursuing the goal of strengthening (…) the democratic legitimacy that allows the Fed to serve the needs of Americans," Powell said.

He recalled that the Monetary Committee had decided about three years ago that "extraordinarily low rates" were no longer in the interest of households, businesses, savers and borrowers.

The Federal Reserve boss insisted that the pace of "gradual rate hikes" had been designed to balance the two risks – neither too much stimulation nor slowing down – "that we both need to take seriously ". "The Fed is next to the plate," said Donald Trump Tuesday.

The occupier of the White House is far from the only one to worry about the tightening of interest rates by the Fed after almost a decade of almost free money.

Some economists fear it will kill an almost perfect economy, with GDP growth of 3.5% in the third quarter and unemployment at 3.7%, the lowest in 48 years, and controlled inflation.