Econometer: Is Trump's criticism of the Fed fair?

Treasury Secretary Steve Mnuchin right says the president respects the central bank's independence

JACQUELYN MARTIN APTreasury Secretary Steve Mnuchin right says the president respects the central bank's independence

In an with Fox Business anchor Trish Regan, the president complained the Fed was behaving too independently and "raising rates too fast".

Gary Richardson, a Fed historian and professor of economics at the University of California at Irvine, was more blunt: "When Trump appointed Powell, he appointed someone who's going to raise interest rates", Richardson said.

Fed officials overall expect rates to rise to 3.1 percent next year and 3.4 percent in 2020, just above their 3 percent estimate for the long-run "neutral" rate at which borrowing costs are neither braking nor stimulating economic growth. By "him", Trump referred to Fed Chairman Jerome Powell.

"I would presume if the president tried to do this, Congress would respond pretty vigorously", he added.

"There are a lot of other people there I'm not so happy with", he said. "But I put him there". As other Fed governors retire, the president has the opportunity to fill more spots.

After the financial crisis of 2008/9, the Federal Reserve intervened by lowering interest rates.

The Fed has been in a unique position of trying to play "tennis when you are at the center of the court" as New York Federal Reserve President John Williams described it last week at a central banking conference on the sidelines of the International Monetary Fund's annual meeting in Bali, Indonesia.

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The Fed should "follow that course through the temporarily shifting and sometimes conflicting signs from the economy unless some strong and steady signal requires a firm but moderate correction", he said at the Economic Club of NY.

But that mix could change-and if it changes sharply, it could move the markets on interest rates, Wessel said. Carney came to Powell's support in an interview as he said that the latter "is an individual that really understands the plumbing of the USA and global financial systems". This guy knows what he's doing.

"Incorporating these developments yields a modernized policy rule that suggests the current level of the policy rate is about right over the forecast horizon, " or the next several years, Bullard said Thursday in a speech in Memphis, Tennessee.

Fischer said that ultimately, the Fed will likely do what it thinks is best for the economy without regard to political appearances.

In response to a question about Mr Trump's criticism, Mr Quarles said, the Fed's job was "to remain focused on the facts of the economy and to be independent from the administration".

Some members of the rate-setting panel - the Federal Open Market Committee - also indicated it might be necessary to raise rates more aggressively to keep the economy from overheating. "Despite this optimism, a number of contacts cited factors that were causing them to forego production or investment opportunities in some cases, including labor shortages and uncertainty regarding trade policy".

Rounds says global factors, like tariffs also play into the economic uncertainty...

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