Trump Fed critique sends dollar lower

Trump MAGA hat

"I'm ready to go to 500", Trump told CNBC's Joe Kernen, suggesting that every Chinese product would be subject to the duties.

St. Louis Federal Reserve Bank President James Bullard said on Friday the Federal Reserve would remain unaffected by Trump's comments on U.S. monetary policy.

Last month, the Fed raised its benchmark rate for a second time this year and projected two more increases in 2018.

The Fed last raised borrowing costs in June.

"And it is worth pondering whether this is a president who is going to break with 25-30 years of tradition in not interfering in Fed policy deliberations going forward".

But JPMorgan economist Michael Feroli advanced an interesting alternate theory: Trump's comments may inspire the Fed to go the other direction.

There's a risk the dollar "de-couples from interest-rate differentials as investors come to terms with the White House's mercantilist USA -dollar policy", Patel.

The Fed's dual mandate is to maximize employment and stabilize prices. The Fed has been carefully and gradually raising rates over the past several years to keep inflation in check and to prevent the economy from overheating. That policy drew rebukes from many Republican lawmakers.

Trump also said Fed Chairman Jerome Powell, whom he nominated, is "a very good man". "We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently".

"I am not happy about it", Trump said. But his remarks to CNBC caught financial markets by surprise Friday.

The dollar index fell immediately after the remarks were broadcast and on Friday morning, a stronger yen saw Tokyo shares edge down 0.5 per cent.

Trump made the statements online even as in a televised interview on CNBC he threatened to slap $500 million in tariffs on China in an escalating trade war.

Wall Street Journal Global Economics Editor Jon Hilsenrath on President Trump calling out the Federal Reserve for raising interest rates too quickly.

"They're picking the wrong customer, I'll tell you that - you know how intense he is on this issue", he said, adding: "Xi seems to think if he waits out the November elections, Trump will be weakened and therefore will lighten the bite".

But current and former Fed officials didn't sound overly concerned about the commander-in-chief's perspective.

However, many analysts doubt Trump's comments will have much impact on Federal Reserve policy or the markets.

Trump tapped Powell, who had served as a governor at the USA central bank, to serve at its helm following Janet Yellen.

Mr Trump has said before that he favours low interest rates, and dismissed concerns about his interference.

"So somebody would say, 'Oh, maybe you shouldn't say that as president.' I couldn't care less what they say, because my views haven't changed".

Donald Trump has also accused China of currency manipulation.

Past efforts to apply political pressure on the Fed have sometimes hurt the economy.

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