Trump Demands Zero Interest Rates From "Boneheads" at the Federal Reserve

Trump Demands Zero Interest Rates From

Investors overwhelmingly expect the Fed to deliver a 25-basis-point cut to interest rates as the global economy slows and the US-China trade war drags into its second year.

President Donald Trump urged the Federal Reserve to lower interest rates to a level typically reserved for recessions or periods of persistently weak growth, suggesting that such a setting could allow the government to refinance Treasury debt at a lower cost.

Lower interest rates are generally reserved for when the economy is in or nearing a recession, which makes the president's repeated calls for such low rates now particularly unusual. Trump has been pressuring Fed chairman Jerome Powell to drop rates to zero.

"People [would be] taking on more risk than they would otherwise because money is even cheaper", Luschini said.

A White House official speaking on background said in response to Trump's tweets that "the president is looking at every tool available to lower the national debt, and we ask Congress to join us in cutting back on wasteful spending". The rate now is in a range of 2% to 2.25%.

Meanwhile, even though Trump hand-picked Powell as head of the USA central bank, he quickly soured on his by-the-book approach and insistence on the Fed's political independence. "A once in a lifetime opportunity that we are missing because of "Boneheads" ".

After raising the benchmark lending rate four times a year ago, to a range of 2.0-2.25 per cent, the central bank cut in July for the first time in more than a decade, partly as insurance against the impact of trade uncertainties on the economy.

The New York Times gives the larger global economic context: "The European Central Bank is expected to cut a key interest rate to a record-low negative 0.5 percent and roll out additional stimulus measures at its meeting on Thursday, in a bid to shore up very-low inflation and waning growth in important economies like Germany".



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