Mnuchin isn't blaming the Fed for the market rout

Chart Source Board of Governors of the Federal Reserve System

And the Fed for decades has enjoyed an independence that has shielded it from whatever political storms may be raging at any given time. I think what they're doing is wrong.

If anything, the market turmoil reflects concerns that the economy could grow too fast, forcing the Fed to move aggressively to snuff out inflation.

But it amounts to good news for the long-term direction of the economy. Analysts in the USA are still positive on the outlook for the U.S. economy, as is the Federal Reserve, which says it is still on course to raise United States interest rates in December.

Trump has said he likes low interest rates, in part because of his background in real estate. Higher interest rates are one of the multiple factors being blamed for the drop. When a bond is paying more in interest, investors aren't as willing to pay high prices for stocks, which are riskier investments.

The Pound-to-Dollar rate was 0.20% higher at 1.3231 while the Euro-to-Dollar rate was 0.28% higher at 1.1565. Indeed depressed long-term rates had led some Fed officials to worry that short-term rates might rise above them and cause the sort of bond yield "inversion" that precedes recession.

The President said the markets were way up over what they were.

"And we just try to do the right thing for the medium and longer term for the country".

It's a huge positive the Federal Reserve is no longer propping up the economy with near-zero rates.

President Donald Trump has zeroed down on the Federal Reserve's interest rate increases as the main reason for yesterday's nosedive in stock prices. "Interest rates are still accommodative but we are gradually moving to a place where they will be neutral", he said, adding that the U.S. economy was a "long way from neutral (interest rates) at this point, probably".

Trump hasn't been shy about expressing his unhappiness with the Fed's interest-rate policies. The central bank has hiked interest rates three times this year and expects to do so again in December.

The median forecast of FOMC officials in September called for interest rate increases to continue into 2020, rising from 3.1% at the end of 2019 to 3.4% at the end of 2020. "That doesn't seem especially surprising". The president also selected Nellie Liang, a former Fed division director who is a Ph.D. economist with expertise in financial stability.

Past U.S. presidents have criticized the central bank, but the recent run of invective was unusual even for Trump.

The president's remarks were quickly qualified by National Economic Council Director Larry Kudlow, who said the Fed was "on target" in policies that were responding to a strong economy.

"I think they're making a big mistake", Trump said during a broadcast of Fox & Friends.

Changes in rates are only normally made in response to changes in domestic inflation but impact currencies because of the push and pull influence they have on worldwide capital flows and their allure for short-term speculators.

Global stock markets fell again on Thursday as investors anxious about signs of slowing growth, rising trade tensions and higher interest rates. Tech stocks took a beating, sending the Nasdaq tumbling 4% - its worst day since the Brexit referendum of June 2016.

Nonetheless, some see growing risks for the central bank amid the Trump assault.

"He is an individual that really understands the plumbing of the U.S. and global financial systems and one example is the reforms that are going underway on London Interbank Offered Rate, or Libor, for which he is one of the main sponsors", said Carney.



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