Trump's stunning comments about the Federal Reserve could actually backfire

Trump Amps up Criticism of Fed interest Rate Rises

The dollar was on the defensive against the yen and euro after U.S. President Donald Trump expressed concern about the currency´s strength and the Federal Reserve´s interest rate increases. The Fed has been raising rates since 2015 and has already hiked them five times since Trump took office in January 2017.

"I can assure because I've spoken to the president". The aide said Trump is being told by his confidantes that the central bank is moving properly and that it would be best to let monetary policy play out.

President Donald Trump said he's "ready to go" with $500 billion in tariffs on Chinese imports, saying the USA has been taken advantage of for too long.

Fed officials voted in March and June to raise interest rates, most recently to a range between 1.75% and 2%, and have penciled in two more rate increases this year.

During an interview with CNBC, Trump said that while Federal Reserve Chair Jerome Powell, who took over the role in February, was a "a very good man", he did not like the central bank's recent interest rate hikes.

Trump has ordered the Commerce Department to investigate whether auto imports pose a threat to US national security that would justify tariffs or other trade restrictions.

Friday's statements suggest the president could continue to escalate a feud with the Fed and take aim at currency markets.

The dollar index, which measures the US currency against a basket of its global peers, fell 0.8 percent, on track for the worst performance in July. "The President's views on interest rates are well-known, and his comments today are a reiteration of those long held positions, and public comments".

Moody's Analytics estimates that if the tariffs were imposed on autos and most Chinese imports and other countries retaliate as expected, annual USA growth would slow by 0.5 percentage point by mid-2019.

The Fed's Board of Governors declined to comment. In particular, the Fed's most recent rate hikes could dilute some of the benefit of the tax cuts Trump signed into law previous year.

"The escalating trade war, if it goes badly, could be a risk for the US economy", Bullard said, adding he understands the policy's objective. Presidents historically do not comment on the Fed's policy as it could be viewed as influencing the bank's decisions, which are meant to be independent of political influence. By maintaining its independence, the central bank can make politically contentious decisions to combat economic challenges, like the huge bond purchases it made after the 2008 financial crisis to help drive down long-term rates to support the economy. For a long, long time the Fed has felt it important to conduct our business that way.

In a pair of tweets, Trump said "China, the European Union and others have been manipulating their currencies. while the USA is raising rates while the dollar gets stronger and stronger with each passing day". "I want them to do well", the U.S. president said of China. Ultimately, he said, "what I'm doing is making it so it's right".

Trump added, referring to the Fed's rate increases: "The United States should not be penalized because we are doing so well".

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