The Fed's next rate decision should leave Trump deeply disappointed

• President Donald Trump has renewed his attacks on the US Federal Reserve since a closely guarded recession warning broke out last month.
• But the independent central bank is preparing to leave the White House with disappointment when it meets this month.
• In the range of 2% to 2.25%, interest rates are already low by historical standards and long-term inflation expectations are taken into account.
• Visit the Markets Insider homepage for more stories.

---

President Donald Trump has renewed his attacks on the US Federal Reserve since last month, a closely guarded surveillance warning of the recession, urged policymakers to take drastic action to wreck the economy.

But the independent central bank is preparing to leave the White House with disappointment when it meets this month.

Businesses and investors are increasingly worried about escalating tariff disputes between the Trump administration and its major trading partners, who have threatened to eliminate some of the brightest points of the bigger economy.

Trump downplayed these risks and instead sought to blame the central bank as key sectors weakened before his bid for reelection in 2020, even suggesting that he would support negative interest rates at the end of the year. United States. The President has repeatedly called for interest rate reductions of up to a full percentage point.

"Germany and other countries have negative interest rates, they are paid for borrowing money" and our Federal Reserve does not act! Remember that they are also our weakest currency competitors! "Said the president. wrote on Twitter on Tuesday.

At the end of the next federal open-market committee meeting on Sept. 18, Trump is unlikely to succeed.

In an interview with the Washington Post shortly after Trump's comments, Boston Fed President Eric Rosengren warned against excessive easing in a context of strong fundamentals. In the range of 2% to 2.25%, interest rates are already low by historical standards and long-term inflation expectations are taken into account.

"You do not want to apply for accommodation at a time when you do not need it, partly because you do not have it when you need it and partly because there are side effects to lower interest rates. This encourages people to take more risks, "said Rosengren.

Some Fed officials have echoed this sentiment in recent weeks. By comparing a vigorous labor market and consumer spending with uncertainty of trade, they deem it necessary to adopt a wait-and-see approach to monetary policy.

"When you have this uncertainty and this frequency of changes, my reaction as a businessman is not to accelerate – it's actually a bit of slowing down the pace and maybe take a little more time, "Dallas Fed President Robert Kaplan told the Wall Street Journal in an interview in August.

Nevertheless, the FOMC has become divided on the next stage of the policy and on the speed at which it should be implemented. In an interview with Reuters on Tuesday, James Bullard, president of the Fed in St. Louis, asked for a half-percentage point reduction.

"It would be better in my mind to go ahead and realign now," he said.

Markets Insider is looking for a millennial investor panel. If you are active in the markets, CLICK HERE to register.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn and Instagram.