The dollar fell versus the euro and pound on Tuesday (Aug 21) after US President Donald Trump hit out at the Federal Reserve's interest rate rises, accusing it of not backing his economic plan, while most equity markets climbed looking ahead to China-US trade talks.
The benchmark U.S. 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.
President Trump complained to wealthy donors at a fund-raiser in the Hamptons last week that the man he chose as chairman of the Federal Reserve, Jerome H. Powell, has disappointed him by raising interest rates, according to people who attended the event. Trump went on to say he wanted more help for the economy from the Fed.
He said the Fed was designed so that it would be accountable to policy makers and the public, but it was also created to be somewhat independent from jawboning from the White House. "I'm not thrilled", Trump said in an interview with Reuters.
In an interview with American Public Media's "Marketplace" radio show in July, Powell said he was "deeply committed" to maintaining the Fed's tradition of preserving its independence from political concerns. The Fed has raised rates twice this year.
The discussion outlined the tough situation the Fed could find itself in should the trade disputes worsen, with USA businesses potentially needing to scale back hiring and consumers possibly facing higher prices on imports.
There are a total of seven governors on the Fed Board, all of whom have a vote on setting interest rates, and Trump still has one remaining vacancy to fill should his current slate of nominees win approval from the Senate.
Mollie Tibbetts' body found, suspect charged
She was reported missing after she was unresponsive to text messages from her boyfriend, Dalton Jack, and was a no-show at work. Authorities, who had narrowed their search to a carwash, Tibbetts's boyfriend's home, a truck stop and two farms.
"While raising interest rates may limit capital outflows and defend the rand, it could end up negatively impacting economic growth".
Fed officials also generally expected the economy would grow at a fast enough rate to put upward pressure on inflation, which recently has come close to the central bank's target. Mr. Trump also criticized Ms. Yellen as a presidential candidate in 2016, saying she should be "ashamed of herself" for keeping interest rates low.
"Most Fed-watchers are of the view that Powell is emphasising the need for financial stability and with a positive U.S. economic backdrop is obliged to tighten policy".
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.
"I am not happy about it".