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Biz leaders fight Trump on Fed critique

Biz leaders fight Trump on Fed critique”

President Donald Trump renewed his attacks on the USA central bank on Thursday, saying it was "too aggressive" in raising interest rates.

Donald Kohn, who served for eight years on the Fed board, said he thought Trump's criticism would have no effect on Fed policy.

Powell has said that Fed officials think their approach to raising rates at a gradual pace will extend the current expansion by keeping inflation under control. "The Fed is going wild. If America has a problem, everyone has a problem", Rogers said. "But I think the Fed has gone insane", he said. "The Fed is going loco, and there is no reason for them to do it and Im not happy about it".

"I don't think any decision has been made with regard to a meeting", Mnuchin said when asked if the Chinese side had offered enough trade concessions to justify a meeting.

Dallas Fed President Robert Kaplan said he still favors the central bank raising short-term interest rates three more times before deciding whether more increases will be necessary to keep the economy on an even keel. US consumer price inflation is now above 2 percent annually and the unemployment rate is the lowest in about 40 years.

United States stocks, which recently hit new all-time highs, are now in the midst of an October slump, sliding sharply because investors are anxious about rising interest rates.

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The December tax cuts that Mr Trump championed, as well as the increased federal spending in this year's budget, are expected to do what the president intended by juicing the economy - but when unemployment was already low and the economy growing at a good rate. "Actually, it's a correction that we've been waiting for a long time".

"I do worry about bringing the Fed into what is really a pretty toxic political environment and undermining confidence in the Fed", Kohn said Thursday in a CNBC interview.

The average rate for a 30-year fixed-rate mortgage rose to 4.7 percent last week, from below 4 percent at the end of 2017, according to data from Freddie Mac.

Mnuchin, speaking to reporters on the sidelines of the International Monetary Fund and World Bank annual meetings in Bali, also said that Chinese officials had told him that they did not want to see a further depreciation of the yuan's exchange rate, an issue that the U.S. has been very concerned about. Trump has imposed $200 billion in tariffs on China and is threatening to levy even more. "They're so tight. I think the Fed has gone insane", added Trump, who tapped Powell to lead the bank but has publicly criticized the Fed under his tenure.

The Fed's rate hikes also have increased the cost of borrowing money to fund domestic and global economic activity of US companies.

Fed spokeswoman Michelle Smith declined to comment on Trump's remarks. Even if the Fed wanted to reverse course and tighten less aggressively, Trump's rant makes it more hard for the central bank to act without raising the specter that presidential pressure, not economic conditions, was the reason.

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He said the USA meant to include the language used in the recently concluded deal with Canada and Mexico, which prohibits the competitive devaluation of exchange rates, would be used in future trade agreements. He also expects the Fed to overshoot its 2% inflation target by "a bit" but added, "I don't see any signs of greater inflationary pressures on the horizon". Two weeks ago, the Fed raised its benchmark rate for the third time this year, and the federal funds rate now sits at a range of 2.00 percent to 2.25 percent.

Major U.S. markets were lower again in Thursday afternoon trading, with the Dow and S&P 500 down roughly a half percent each.

The precipitous fall of the market in previous days has alarmed Trump who had tethered his electoral fortunes to soaring stocks.

For stocks, rates seem to be rising due to a strengthening economy, which should eventually feed through into corporate profits.

"The fundamentals and future of the USA economy remain incredibly strong", Sanders said in a statement. Chief among them have been the stock markets.

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