Trump has repeatedly pushed President Jerome Powell – his choice to run the US central bank – blaming the most powerful central banker in the world because the Federal Reserve raised interest rates last year just as Republicans gave up the economy with tax cuts. On Tuesday, Trump even refused to exclude Powell's destruction, saying he would closely follow the chair.
"I want to be given a level playing field so far," Trump told reporters at the White House, leaving for his premier match.
Powell preaches patience for the past few months when it comes to a policy of setting rates. But after central bankers meet in Washington this week for their two-day political meeting, they face many challenges ̵
1; including the possibility of a prolonged trade war with Beijing, and the latest signs of a slowdown in the US economy.
These concerns burdened the Fed with a dilemma: When should you reduce interest rates? And how fast do you have to do it?
At their last meeting in May, Fed officials gave a sense of relief that fears of global economic downturn declined as a result of positive economic news from China as well as signs. that tensions between Washington and Beijing seem to be alleviating because the negotiators are constantly working to make a deal
But since then all has been overcome. Negotiations between the two largest economies in the world came a few days after the Fed meeting, when the Trump administration said China had abandoned its trade commitments. US markets fell as Trump threatened even more tariffs for China, and both businesses and investors fought for uncertainty about the end of the war. Other threats by Trump on Mexico's tariffs, though short-lived, have added to the already tense climate.
This kind of anxiety, coupled with the mixed economic picture, put the Fed in a precarious situation as it tried to expand one of the longest economic expansions since the financial crisis of 2008
early 2019 when there was two predictions of interest rates, "says Steve Rick, chief economist at CUNA Mutual Group. "Then, in March, we pause, and now we are talking about a potential reduction."
Most economists do not think the Federal Reserve will change the prices of this week's meeting, leaving the reference rate between 2.25% and 2.5%. The central bank is likely to make a move when it has a clearer picture of what the US economy is doing, and what happens when Trump and Chinese President Jin Geing talk about trade later this month.
A message from the FOMC meeting in June was that the commission would "act appropriately" to support enlargement, "wrote Michael Gainen, chief economist at Barclays Investment Bank in a message to customers." We are looking for a commission to signal "
It is unclear how trade talks between the US and China will be discussed. Trump publishes
that he had a" very good "phone call talk to Si and that both leaders will have an "extended meeting" later this month at a meeting of the leaders of the 20th Osaka Group, Japan
Although the Federal Reserve is likely to leave things like this week, the likelihood of interest rate cuts will increase next month and the remainder of the year, according to CME's FedWatch. Powell also sent US markets higher earlier this month after declaring that politicians would "act appropriately" to sustain economic expansion – the remarks that Wall Street interpreted as a sign that the Federal Reserve would cut rates if it were neo to go. In any case, if policy makers cut interest rates over the coming months, experts warn that it will not signal a healthy outlook for the US economy.
"The Federal Reserve, which takes such action, will mean a significant economic weakness than expected just a few months earlier," said Joseph Ganyon, senior research fellow at Peterson Institute of International Economics and a former visiting partner in the department. of FED cash. "I do not see how they will be seen as good news."