In a speech at the Economic Club of New York, US President Donald Trump renewed his criticism of the Federal Reserve and its chairman Jerome Powell.
Describing the state of the American economy Mr Trump stated:
The President took credit for these claims, switching from the first person plural to the first person singular: “I did this despite a near-record number of rate increases and quantitative tightening by the Federal Reserve since I won the election.”
Although the Fed recently cut interest rates, Mr Trump told the audience at the distinguished club, whose previous speakers include President John F Kennedy and President Woodrow Wilson: “Remember we are actively competing with nations that openly cut interest rates so that many are now actually getting paid when they pay off their loan, known as negative interest. Who ever heard of such a thing?”
Although an economic theory with a long academic history, negative interest rates are a relatively recent phenomena. The experiment was tried in some European countries, such as Denmark, Sweden and Switzerland, following the 2008 financial crisis in an effort to promote growth. Japan also has negative rates at the current time.
Chairman Powell is expected to testify later this afternoon to the US Joint Economic Committee. Investors will be closely monitoring his testimony for signs of future cuts or hikes. Few believe he will immediately bow to President Trump’s intent on negative interest rates. Mr Trump himself seemed to know this stating: “Give me some of that. Give me some of that money. I want some of that money. Our Federal Reserve doesn’t let us do it.”
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