The Fed is facing fresh criticism from U.S. President Donald Trump following a two-day conference where the body is anticipated to announce a new decision relating to interest rates.
The U.S. Federal Reserve is expected to leave borrowing costs at the same level as it aims to maintain a ‘patient’ fiscal policy stance amidst robust economic growth.
The economy is on an upward trajectory and unemployment is near historical lows. But that hasn’t hindered President Donald Trump’s assault on the Jerome Powell and the Fed, insisting that the body cut interest rates by an entire percentage to boost American development.
On Tuesday, Trump tweeted that the U.S. economy has “the capacity to go up like a rocket” if the Fed would only sever rates and resume the emergency bond purchasing programs it unveiled after the 2008 financial downturn aiming to relieve long-lasting loan rates and to spur growth and development.
The comments mark the most recent and most pointed turn in Trump’s repeated objection of Fed Chairman Jerome Powell, a system that has diverged with a 25-year tradition of U.S. presidents straying away from statements on Fed policy out of regard for its autonomy.
Trump contrasted the Fed’s moves with China’s economic growth, which he concluded was bolstered by pro-active lending policies. The president has been especially critical of Fed Chairman Jerome Powell and the Fed’s credit tightening policies.
Trump’s suggestion to cut interest rates by a full percentage point would be significant. The last time the Fed cut rates that much was in December 2008, in the midst of the most significant monetary crisis since the Great Depression. The central bank slashed rates from one percent to zero at the end of 2008. It had never done anything like that prior to the crisis. And, with the economy continuing to grow, the body is certainly not likely to do it again anytime soon.
So what’s the Fed to do?
The Fed will likely repeat a message that has actually reassured consumers and financiers since the start of the year: No rate hikes are on the agenda this year.
The Fed’s low-rate policy is keeping loan expenses down, serving to enhance stock markets and help support an economy that’s growing steadily. And with inflation remaining subdued, the Fed is viewed as able to remain on the sidelines at least throughout 2019.
Economic experts overwhelmingly anticipate no significant change in its rate policy.
Ahead of the Fed ruling, futures markets were predicting reasonable gains in U.S. stock exchanges on Wednesday morning. Dow futures and the more comprehensive S&P 500 futures are both up 0.3%.
The U.S. stock market has been riding high this year, even breaking records, after mounting a massive resurgence from an abrupt drop at the end of 2018. Investors have been cheered by evidence that the global economy is back on track.
U.S. markets are expected to open in the green today, while the dollar continues to slip.