Fed criticism drives dollar to eight-week low against yen

US President Donald Trump criticised US Federal Reserve Chairman Jerome Powell for raising interest rates, breaking with recent presidents' practice of not commenting on the Fed's handling of the economy.

At the Southampton fundraiser hosted by Howard Lorber Friday, President Trump lamented that his pick for Federal Reserve chair has raised interest rates.

Only once short-term rates reach a "neutral" level where they are neither stimulating nor braking the economy should the central bank potentially stop raising rates and figure out what to do next, Dallas Fed President Robert Kaplan said in an essay. But during this period of time I should be given some help by the Fed.

Trump has departed from this past practice and said he would not shy from future criticism should the Fed keep lifting rates.

Past presidents from both parties have sought to insulate the central bank from political pressure, anxious it could taint the Fed's decision-making and erode its credibility with the public.

Most analysts think that Trump's criticism will have little effect on the Fed's rate-hike plans, given the USA central bank's legal independence.

Trump, unlike the Fed, doesn't seem concerned with rising prices as the 12-month rate of core inflation in July rose to 2.4%, "a level that hasn't been seen since September 2008", according to MarketWatch.

Critical comments by US President Donald Trump about the country's central bank have held back some stocks while the US dollar fell for the fourth consecutive day in its worst spell since March. He voted in lockstep with Yellen, who also supported gradual rate hikes in her final years leading the Fed.

As a result, the Federal Reserve decided in December 2015 to raise rates by a very small amount for the first time in a decade.

But with Turkish markets closed for a religious holiday and anticipated talks between the United States and China seen lowering the temperature of the dispute, Trump's central bank comments were the main catalyst. Most right-leaning economists and lawmakers say keeping rates low could risk rampant inflation and financial market bubbles.

Financial market analysts doubt current Fed policy makers are likely to be cowed by Trump's outbursts over their policy choices.

Asked if he believed in the Fed's independence, Trump said: "I believe in the Fed doing what's good for the country".

"I am not happy about it". The president does choose members of the policy-setting Fed Board, and in addition to Powell, he has appointed one Fed governor and nominated three others.

Will Trump be able to pressure Powell into changing course? "I'll let you know in seven years".

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