Published: Thu, June 27, 2019
Markets | By Erika Turner

Dollar holds steady on reduced bets on steep USA rate cut

Dollar holds steady on reduced bets on steep USA rate cut

Federal Reserve Chairman Jerome Powell said Tuesday the outlook for the US economy has become cloudier since early May, with rising uncertainties over trade and global growth causing the central bank to reassess its next move on interest rates.

Trump said Powell was doing a "bad job" and he urged the Fed to lower rates so that USA exports can compete with countries that he said are devaluing their currencies.

The Fed suggested, last week, that it could cut borrowing costs as early as July amid concerns about the US-China trade war, causing markets to surge in the past few weeks. Now they stick, like a stubborn child, when we need rates cuts, & easing, to make up for what other countries are doing against us.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc.

Mr Powell has responded, saying the Fed is politically independent and that he can not be fired at will by the president.

Trump reiterated those points on Fox Wednesday, saying: "I have the right to demote him".

Speaking at the forum, Mr Powell said that "authority for overseeing Libra is going to be in a number of places but I think the big picture is we're going to be looking really carefully at it".

St Louis Federal Reserve Bank President James Bullard said he does not think the USA economic situation is dire enough to warrant cutting rates by a half-percentage point at its next meeting in July, even though he pushed to lower rates last week.

"But neither side is ready to end the war", Kelly said, predicting trade tensions would linger until the USA presidential election in November 2020.

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Trump said the Fed went too far in raising rates and trimming its bond holdings.

"I think the law is clear that I have a four-year term, and I fully intend to serve it", Powell said after the Fed's June policy-setting meeting.

However Mr Trump has bitterly attacked the United States central bank since previous year, accusing it of tightening monetary policy too quickly and preventing what he says could be skyrocketing economic growth. "A rate cut in July is a done deal".

The Fed makes its decisions independently from the White House, but Trump has broken with decades of precedent in directly criticising interest rate rises.

Real estate, healthcare and utilities led declines on Wednesday, while banks - which tend to benefit from higher interest rates - auto and energy stocks, outperformed.

Trump in a Tweet on Monday echoed his frustration with the Fed and Powell, whom he has reportedly considered firing.

In public remarks on yesterday, Mr Powell also said research showed that political interference in monetary policy harmed economies.

"The feeling was, 'Oh my god, this guy has taken over the Fed, '" he said, of the reactions he heard in China.

Tyson Foods Inc and Pilgrims Pride Corp dipped 1.1 per cent and 1.3 per cent, respectively, after the US Department of Justice opened a criminal probe over possible poultry price fixing.

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