Fed ready to hike again if economy remains on track

Fed ready to hike again if economy remains on track

Fed ready to hike again if economy remains on track

A weaker U.S. dollar, which fell sharply this week after President Donald Trump criticised the Federal Reserve's interest rate rises, supported the rand's rally.

The benchmark United States interest rate, which plays a large role in setting borrowing costs for mortgages, credit cards, small business and auto loans, was set at a range of 0.5 per cent to 0.75 per cent when Trump was sworn in.

Trump's remarks to Reuters follow reports that the president criticized the Fed's interest rate hikes at fundraiser in Long Island over the weekend.

Asked if he believed in the Fed's independence, Trump said: "I believe in the Fed doing what's good for the country". But during this period of time I should be given some help by the Fed.

The minutes also gave an indication the Fed was preparing to debate once again how best to implement its monetary policy. The Trump administration has raised tariffs on imports from a range of countries, including China and members of the European Union, triggering retaliatory tariffs on US exports.

The Fed is expected to raise rates twice more this year.

US stocks dipped after Trump's comments to Reuters and the dollar edged down against a basket of currencies. The president publicly questioned the interest-rate hikes in July.

Speaking at a fundraising event in the Hamptons, Trump said he wanted Powell to start acting like a cheap-money chairman while speaking about the recent increase in interest rates.

It is worth noting that despite Trump's criticism of Powell's rate hike plan, the markets are still discounting 75 basis points of hiking by December 2019.

Donald Trump chose Jerome Powell past year to head the USA central bank, promoting a soft-spoken centrist to replace Janet Yellen. 1 meeting on Wednesday, has been raising rates gradually since 2015 and is now concerned the economy is so strong that inflation could rise persistently above its 2 percent target.

American presidents have rarely criticized the Fed in recent decades because its independence has been seen as important for economic stability. Mr. Trump also criticized Ms. Yellen as a presidential candidate in 2016, saying she should be "ashamed of herself" for keeping interest rates low.

"Am I happy with my choice?" Trump said to Reuters about Powell.

"We do our work in a strictly nonpolitical way, based on detailed analysis, which we put on the record transparently, and we don't take political considerations into account", Powell said in the interview. He took on the job earlier this year; his term expires in 2021.

After sliding to a two-year low of 15.70 last week as the Turkish crisis triggered a broad flight from emerging markets, the rand has regained some ground, advancing around 8% in the last seven days as the greenback's rally faltered.

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