Connect with us

Markets

Trump Demands Fed Help on Economy, Complains About Interest Rate Rises

Published

on

trump
  • Trump Demands Fed Help on Economy, Complains About Interest Rate Rises

U.S. President Donald Trump said on Monday he was “not thrilled” with the Federal Reserve under his own appointee, Chairman Jerome Powell, for raising interest rates and said the U.S. central bank should do more to help him to boost the economy.

In the middle of international trade disputes, Trump in an interview with Reuters also accused China and Europe of manipulating their respective currencies.

American presidents have rarely criticized the Fed in recent decades because its independence has been seen as important for economic stability. Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates.

The president spooked investors in July when he criticized the U.S. central bank’s over tightening monetary policy. On Monday he said the Fed should be more accommodating on interest rates.

“I’m not thrilled with his raising of interest rates, no. I’m not thrilled,” Trump said, referring to Powell. Trump nominated Powell last year to replace former Fed Chair Janet Yellen.

U.S. stock prices dipped after Trump’s comments to Reuters and the U.S. dollar .DXY edged down against a basket of currencies.

Trump, who criticized the Fed when he was a candidate, said other countries benefited from their central banks’ moves during tough trade talks, but the United States was not getting support from the Fed.

“We’re negotiating very powerfully and strongly with other nations. We’re going to win. But during this period of time I should be given some help by the Fed. The other countries are accommodated,” Trump said.

The Fed has raised interest rates twice this year and is expected to do so again next month with consumer price inflation rising to 2.9 percent in July, its highest level in six years, and unemployment at 3.9 percent, the lowest level in about 20 years.

After leaving its policy interest rates at historic lows for about six years after the 2008 global financial crisis, the Fed began slowly raising rates again in late 2015.

Trump said China was manipulating its yuan currency to make up for having to pay tariffs on imports imposed by Washington. “I think China’s manipulating their currency, absolutely. And I think the euro is being manipulated also,” Trump said.

“What they’re doing is making up for the fact that they’re now paying … hundreds of millions of dollars and in some cases billions of dollars into the United States Treasury. And so they’re being accommodated and I’m not. And I’ll still win.”

Trump has frequently accused China of manipulating its currency, but his administration has so far declined to name China formally as a currency manipulator in a semi-annual report from the U.S. Treasury Department.

The U.S. dollar has strengthened this year by 5.35 percent against the yuan, reversing most of its large drop against the Chinese currency in 2017.

The euro is off by about 4.3 percent against the greenback this year, beset by concerns over the pace of economic growth in the EU trading bloc and over U.S.-European trade tensions.

Trump has made reducing U.S. trade deficits a priority and the combination of rising interest rates and a strengthening dollar pose risks for export growth.

A Fed spokesman declined to comment on Trump’s remarks on Monday.

Powell last month said in an interview that the Fed has a “long tradition” of independence from political concerns, and that no one in the Trump administration had said anything to him that gave him concerns on that front.

“We’re going to do our business in a way that’s strictly nonpolitical, without taking political issues into consideration, and that carries out the mandate Congress has given us,” he said.

Financial market analysts doubt current Fed policy makers are likely to be cowed by Trump’s outbursts over their policy choices.

Still, it might affect candidates for openings on the bank’s seven-member board, said Guy LeBas, fixed income strategist at Janney Montgomery Scott in Philadelphia. Currently only three seats are filled.

“I doubt these comments move the needle for Powell and his colleagues, but it certainly sends a strong signal to those candidates interested in vying for one of the Fed Board’s many open seats: favor easy money policy or find another job,” LeBas said.

In addition to picking Powell as Fed chair, Trump has appointed one other board member, Randal Quarles, and has nominated three others to the panel, two of whom are expected to be confirmed soon by the Senate. That leaves at least one other current opening for him to fill.

Asked if he believed in the Fed’s independence, Trump said: “I believe in the Fed doing what’s good for the country.”

Powell took over as Fed chief earlier this year.

“Am I happy with my choice?” Trump said to Reuters about Powell. “I’ll let you know in seven years.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Published

on

Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

Continue Reading

Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Published

on

Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

Continue Reading

Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Published

on

oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

Continue Reading

Trending