U.S President Donald Trump has shown vivid criticism towards the Federal Reserve, also known as “Fed”.
A new report showed that U.S interests have skyrocketed since the election of Donald Trump. According to Wilshire Associates, it has risen by $9.1 trillion, or 35.6%, since Election Day in 2016.
In a recent tweet storm, the President of the United States said that if the Fed was more strategical, there would have been an increase of the GDP by 4%.
This comes a few months after Donald Trump asked the Federal Reserve to cut its rates, his policy shocked the public opinion as U.S Presidents have always respected the unbiased institution of the Fed.
A new “tweet storm”
https://twitter.com/realDonaldTrump/status/1117428291227533312?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1117428291227533312&ref_url=https%3A%2F%2Fwww.bloomberg.com%2Fnews%2Farticles%2F2019-04-14%2Ftrump-slams-fed-again-says-stocks-should-be-5-000-10-000-higher
As U.S President Donald Trump already criticized the Federal Reserve a few months, he posted a new tweet last week criticizing the institution’s policy.
According to Trump, the interest rates of the Fed are hindering the American economy as the rates are too high and not printing enough currency.
As Bloomberg explains, this tweet happened a few days after the Fed’s Chairman Jerome Powell, “a frequent target of Trump’s criticism, told lawmakers at a Democratic Party retreat that the central bank won’t bend to political pressure, according to two people in the room for the closed-door event”.
According to the financial newspaper, Trump’s goal would be to stabilize the markets and reaching a balance “that neither stymies nor stimulates growth”. Since 2018, the Fed has raised its interest four times and said it would be “patient”.
Europe defends the Fed
While the Federal Reserve was grilled by the U.S President and in an unprecedented turn, the European Central Bank defended the Fed’s initiative.
The International Monetary Fund’s new chief economist has backed the Federal Reserve’s decision to shelve interest rate increases, citing “weakening momentum” and “considerable and rising” risks to the global outlook. https://t.co/zwGo4y1tan #economy #Fed #IMF
— Carles Dijous (AAlb) (@carlesdijous) February 11, 2019
During the International Monetary Fund summit last week in Washington D.C, Mario Draghi, the President of the ECB stressed that it was crucial for the Fed to keep its independence.
“I am certainly worried about the bank independence, especially in the most important jurisdiction in the world”, Draghi said during a press conference.
Moreover, Draghi reminded investors and governments that the political “meddling” could trigger the economy by creating a possible inflation, while most experts predict and fear a financial crisis in the upcoming months.
An impact on the U.S economy?
If one considers the numbers from the markets, shareholders seem to be satisfied with the results.
Standard & Poor’s 500 Index closed last week at 2,907.41, only 1% less than last September – when it was reaching a record-high.
Last month, U.S. central bankers predicted there would not be any dramatic rate change this year, “based on their outlook for solid if unspectacular economic growth with inflation near goal”, according to Bloomberg.
This caused confusion among experts, as it showed that the numbers expected by Donald Trump were very high compared to the real market.
In the meantime, a chart across social media was suggesting that more than 83% of Americans do not own any stocks. At the same time, the poorest 80% Americans own 6.7% of the American stocks.
All in all, it seems that the Fed’s policy should not affect most of the Americans but only the top electorate that Trump is aiming for his reelection in 2020.