Monday, President Trump again demanded that the Fed cut interest rates in the wake of an attack in Saudi Arabia over the weekend led to a major Crude Oil disruption.
In a pair of tweets Monday, the President questioned whether the Fed would “ever get into the game” and said the central bank and its Chairman, Jerome Powell, “don’t have a clue.” He again hammered the Fed to lower the interest rate, citing a strong USD’s harmful effect on US exporters.
“And now, on top of it all, the Oil hit,” he wrote. “Big Interest Rate Drop, Stimulus!”
After cutting the benchmark interest rate in July by 1/4th pt, Fed officials are gearing up to cut rates again, likely by another 1/4 pt, at their 17-18 September policy meeting. Chairman Powell has defended the Fed’s independence from the repeated attacks by President Trump.
The FOMC meets Tuesday and Wednesday, with a press conference by Chairman Powell scheduled to follow the release of its statement.
The Fed’s likely action to lower its target policy rate to a range of between 1.75% and 2.00%, policymakers hope, will boost the economy by easing borrowing costs on everything from car loans to corporate bonds.
President Trump appeared to suggest that Fed officials should follow the lead of Chinese PBoC.
“Producer prices in China shrank most in 3 years due to China’s big devaluation of their currency, coupled with monetary stimulus,” the President Tweeted.
Despite the expected decision to cut interest rates by a 1/4 pt, investors also await the Fed’s language and new economic projections. That data will show how deeply a Summer of trouble has been felt – from an intensifying US-China trade dispute and the relaunch of crisis-style stimulus by the ECB to a stream of weak manufacturing data that may hint at larger problems for the United States
Making and Keeping America Great!
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