The Fed vs Trump: The Battle is On

Trump says he 'maybe' regrets making Powell Fed chairman

"Every time we do something great, he raises the interest rates", Trump told the WSJ. "China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S.is raising rates while the dollars gets stronger and stronger with each passing day - taking away our big competitive edge", Trump tweets.

"Everyone should be allowed to criticize us and question whether or not we are undertaking the right actions", Chicago Federal Reserve bank President Charles Evans said earlier this month.

US President Donald Trump told the Wall Street Journal in an interview that he was intentionally sending a direct message to Federal Reserve chairman Jerome Powell that he wanted lower interest rates, even as he acknowledged that the US central bank is an independent entity. Trump has said the hikes will stifle the economy's growth.

The calendar does not say what was discussed, nor who initiated the meetings, and a Fed spokesman declined to comment.

The central bank is trying to cool down the red-hot economy after Washington's debt-fueled tax cuts and spending surge. Trump blamed the nation's central bank for the latest market turmoil, saying the "Fed has gone insane".

If inflation were to materialize, Trump said he would rather raise rates "slower and heavier, at a later date", precisely the scenario the Fed has said it wants to avoid so that it does not inadvertently trigger a recession by tightening too aggressively.

Continued volatility in asset prices including stock prices are indicators of financial conditions, he added. He joined Trump's other two picks, Powell and Randal Quarles, who now sit on the board with Lael Brainard, an appointee of former President Barack Obama. "I believe that some further gradual adjustment in the federal funds rate will be appropriate". As it stands, the Fed expects to hike again in December, and three more times next year. Specifically, he talked about the "neutral" rate of interest that is neither stimulative nor acommodative, and said history has shown that staying below neutral risks letting inflation run too hot.

Perhaps most significantly, President Richard Nixon replaced Martin with Arthur Burns, who caved in to White House pressure for low rates in what is widely regarded as a policy mistake that fed runaway inflation.

Trump's criticisms mark a departure from the practices of his recent predecessors. But the courts ruled in a case decades ago involving the Federal Trade Commission that this language has to involve more than a policy disagreement between the president and the Fed.

Information for this article was contributed by Erik Wasson of Bloomberg News.

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