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Trump pressures Fed ahead of meeting, warns against 'another mistake'

Trump pressures Fed ahead of meeting, warns against 'another mistake'

Trump's tweet follows one on Monday slamming the Fed for "even considering" another interest-rate increase, laying out arguments against a hike to savor the achievement of a strong US economy. "Take the Victory!" Trump said in a Twitter message.

For now, most forecasters think policymakers will ignore Mr. Trump's grumbling and raise the federal funds rate a quarter point, which would be its fourth hike this year.

The Fed has said the United States economy is healthy enough that the ultra-low rates put in place during the financial crisis are no longer necessary.

In a piece Tuesday titled "Time for a Fed Pause," the Journal urged the Federal Open Market Committee to forgo a rate hike amid a lack of inflation and a possible slowing in USA economic growth.

After the Wall Street Journal posted an op-ed, which suggested that raising interest rates will hurt the economy, Trump told the feds to listen to the publication.

Fed officials continue to deny that Trump's tweets and criticisms are having any impact on monetary policy.

"We see the December (Fed) meeting producing a dovish hike, where the Fed further affirms a shift to a nimble regime, while also shifting its projected hiking path and economic projections downward", wrote the BNP Paribas economics team in a note to clients. The criticism breaks from the tradition of previous USA presidents, who would avoid weighing in on monetary policy out of respect for the Fed's independence.

December 2018 has so far been one of the ugliest Decembers in US stock market history. "The unemployment rate is 3.7 percent and falling, pointing clearly to sustained upward pressure on the pace of wage gains, while real short rates right now are zero".

Lawrence White, an economics professor at New York University's Stern School, said he expects the Fed to remain mindful of the mistakes of the 1970s, when officials allowed inflation to erupt, requiring sharply higher interest rates and a painful recession to root out.

"I just don't think of it", said Mary Daly, president of the San Francisco Fed, in an appearance last week on PBS NewsHour. And some predict that the rate increases, which began three years ago, will end altogether next year.

But this week, in the view of many analysts, the central bank could indicate that no more than two rate hikes are likely next year.

The president pointed to the Wall Street Journal editorial page which urged the Federal Reserve to "pause its double-barreled blitz of higher interest rates".

"Of course the President respects the independence of the Fed". Powell will speak at a news conference at 2:30 p.m.

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