Trump 'not happy' with Fed's interest rate hike

Trump 'not happy' with Fed's interest rate hike

Trump 'not happy' with Fed's interest rate hike

That would put the USA central bank's benchmark overnight lending rate at 3.4%, roughly half a percentage point above its estimated "neutral" rate of interest, at which rates neither stimulate nor restrict the economy.

In their statement announcing the decision and marking the end of the "accommodative" monetary policy era, Fed officials removed a sentence in prior statements that said its interest rate policy was supporting a strong job market and a return to 2% inflation.

As a result of the three rounds of interest rate hikes this year, the average rate for a 30-year fixed mortgage has jumped by almost a full percentage point since a year ago.

Due to widespread anticipation of rate hikes ahead of Wednesday's decision, total mortgage applications in the USA increased by 2.9 percent last week compared to the previous week, according to the Mortgage Bankers Association's seasonally adjusted index reported by CNBC. Most observers expect a fourth hike before the end of 2018.

Fed Governor Brainard also introduced the idea of short-term neutral and long-term neutral. The Fed has also indicated it wants three more rate hikes in 2019. In a highly unusual move for a president, Trump has publicly complained that the Fed's rate increases could blunt his efforts to boost growth through tax cuts and deregulation. "Their real challenge starts after the first increase in 2019, which will bring the rate to 2.75%, or finally back even to inflation".

That message might not have been what U.S. President Donald Trump, now waging a trade war with China and trade disputes with many other countries, including Canada, wanted to hear. It foresees the economy growing 3.1 per cent this year before slowing to 2.5 per cent in 2019, 2 per cent in 2020 and 1.8 per cent in 2021. And growth is expected to decelerate to 2.5 percent next year.

BOMBSHELL: Two Men Tell Judiciary Committee They Did It, Not Kavanaugh | Trending
Koegler said that he and Ford had discussed the incident in 2016, but Kavanaugh was not mentioned by name until June of this year. "I believe I was drugged using Quaaludes (a sedative) or something similar placed in what I was drinking", she said.

The Fed would normally respond to weaker growth by cutting interest rates.

Megan Greene, global chief economist at Manulife Asset Management, said she thought the tariffs are more likely to slow the economy than to accelerate inflation.

As a presidential candidate, Trump denounced the Fed's promotion of low rates as creating a "big, fat, juicy bubble", saying that then-Fed Chair Janet Yellen should be "ashamed" of wanting to bolster the Obama administration's legacy. But concern is growing that China won't change its practices, the higher tariffs on USA and Chinese goods will become permanent and both economies - the world's two largest - will suffer.

"We don't consider political factors", Powell said when asked about pressure from Trump to keep rates low.

Powell did say that regional Fed meetings with business leaders around the country show they are anxious about the potential impact of tariffs. "Job gains have been strong, on average, in recent months, and the unemployment rate has stayed low", the FOMC said in a statement. But it has been gradually raising them over the past three years.

The Fed's concern is that that could lead to the "loss of business confidence and that can reduce investment".

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