Trump criticizes US dollar's strength, blames the Fed

Trump criticizes US dollar's strength, blames the Fed

"I am not! The Fed's high interest rate level, in comparison to other countries, is keeping the dollar high, making it more hard for our great manufacturers like Caterpillar, Boeing, John Deere, our vehicle companies, & others, to compete on a level playing field".

The labor market and inflation are two major concerns for the Fed's policymakers.

Second, in July the International Monetary Fund downgraded its forecast for global economic growth for the second time this year because of sluggish global demands, which could weaken the USA economy.

But the United States central bankers "have called it wrong at every step of the way". The latest comments come after Trump has spent several months escalating a war of words with the Fed, which he once called his "biggest threat".


Maurice Obstfeld, an economics professor at the University of California, Berkeley, and a senior fellow at the nonpartisan Peterson Institute, said the President has realized that "if there's weakening in the economy, if there's weakening in the stock market, the prospect of another Fed interest rate cut rises, and so he might view the Fed as providing some insurance for him on that front".

And third, the US' economic growth has been propelled largely by tax cuts, which will gradually fade out.

The Fed most recently lowered its benchmark interest rate last week by a quarter point, to a range of 2 percent to 2.25 percent, which is a historic low.

Earlier, the president alleged that the US Federal Reserve, not China, was the biggest hurdle to a US victory in the US-Chinese trade spat.


"Examples abound of political leaders calling for the central bank to implement a monetary policy that provides a short-term boost to the economy around election time". Which means China should devise a monetary policy that suits its domestic economic conditions.

This week, at least four global central banks rolled out easing policies including New Zealand, Thailand, India and the Philippines. An ideal scenario if President Trump is not re-elected in 2020. Also, if the U.S. doesn't opt for competitive devaluation of the dollar, it would be conducive to maintaining stability in the foreign exchange market.

Typically, these measures could be counterbalanced by further government stimulus packages, but according to analysts, China may not be as aggressive on these as they have been in the past.


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