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Trump attacks Fed on eve of policy meeting

Dec 17. 2018
File photo : Trump//EPA-EFE
File photo : Trump//EPA-EFE
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Washington- US President Donald Trump again attacked the Federal Reserve on Monday for considering raising interest rates, on the eve of a meeting at which policymakers are widely expected to do so again.

The Twitter outburst renewed the president's rock throwing at the central bank, which he accuses of undermining his economic agenda of tax cuts, slashed regulations and multi-front trade offensives.

Trump has repeatedly broken with norms of recent decades, hammering the central bank this year over its moves away from the zero interest rate policy implemented during the global financial crisis.

"It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike," Trump wrote, in a message sent one hour before stock markets were due to open.

"Take the Victory!"

As the US economy has recovered, the Fed has been raising the benchmark lending rate gradually since December 2015.

But Trump has called the central bank "crazy," "out of control" and a greater economic threat than China, which the president blames for hollowing out American industry through unfair trade.

But analysts and former Fed members say Trump's unprecedented vitriol could cause the central bank to prove its independence by raising rates even if policymakers might otherwise have held off.

The Fed on Tuesday opens its two-day policy meeting, and is widely expected to raise the key rate for the fourth time this year, working to get ahead of expected gains in inflation.

- Staying out of politics -

Policymakers have offered little reaction to Trump's string of taunts, with Fed Chairman Jerome Powell saying the political noise does not factor into their decisions.

Inflation is holding right around the Fed's two percent target, but if markets believe the Fed can be swayed by political pressure, inflation fears could ignite and become a more serious problem.

Amid brisk economic expansion after a decade of steady job growth, US unemployment is flirting with a 50-year low, but the US economy is expected to slow.

And with global economy also weakening, there is a growing feeling the central bank will not have to raise rates as much as previously expected next year.

Powell and other officials in recent weeks have suggested they could show patience in 2019 as they study incoming economic data.

Futures markets currently put the odds of a rate hike this week at about 80 percent.

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