In a series of tweets on Friday, Donald Trump complained about the Fed's current round of rate hikes, saying while policymakers in Europe and China are cutting their interest rates, America's central bank is doing the opposite, which is widening the trade imbalance he is trying to remedy.
"Tightening now hurts all that we have done", Trump continued, calling the Fed's strategy into question, and raising larger concerns over whether he is trying to interfere in the independence of the bank. So the Fed's rate hikes have lit a fire under the USA dollar, something which tends to widen the country's trade deficit as foreign countries with weaker currencies become much cheaper to import from.
China filed a challenge against the latest round of USA tariffs with the World Trade Organization this earlier week.
For the second day in a row, President Trump on Friday ripped the Federal Reserve for hiking interest rates - continuing an aggressive assault on the central bank, which is normally off limits from presidential attacks. Greenspan did lower rates 13 times over 1991-92, but slowed the pace of cuts in the latter year, much to the White House's annoyance.
Presidents have historically avoided criticizing the Fed, which is created to be independent from political interference. He also called Jerome Powell, whom Trump nominated to lead the Fed, a "very good man".
Trump's comments will make life hard for both the Treasury and the Fed, said Tony Fratto, former White House deputy press secretary under George W. Bush and founder of Hamilton Place Strategies in Washington.
Intelligence community, political experts criticize president’s comments at summit with Putin
You couldn't blame Putin if he took Trump's comments as an open door to meddle again in 2018 and 2020. US Senator Charles Schumer was also miffed by Trump's comments.
White House economic adviser Larry Kudlow blamed Chinese President Xi Jinping for a lack of progress in bilateral trade talks, saying that lower-ranking officials want a deal.
"I don't want them to be scared". "But I don't like all of this work that goes into doing what we're doing".
President Trump on Friday cited alleged currency manipulation by China and the European Union as a justification for not raising US interest rates as he doubled down on his criticism of the Federal Reserve.
President Donald Trump broke a multi-decade tradition by weighing in on the Federal Reserve's monetary policy.
His tweet came a day after he told CNBC that he was "not thrilled" the Federal Reserve was raising borrowing costs as the economy improved. I am not happy about it. They simply mean that Americans trade more money for Chinese goods than vice versa, largely because Chinese goods are cheaper, which in turn affords Americans a higher standard of living.
In the full interview released today, Trump reiterated his claim that the United States is "being taken advantage of" on issues including trade policy.
Trump's criticism of the Fed could backfire if Powell and the Fed feel the need to prove their independence. More than 70 per cent of Republican and Republican-leaning USA adults believe increased tariffs between the United States and its trading partners will be good for the country, according to a Pew Research Centre survey.
Many companies in the USA are opposed to the administration's use of tariffs against China, saying they risk hurting business and the economy without being likely to change behaviour.