Strong dollar hurting US competitiveness: Trump

March 04, 2019 09:02
Donald Trump speaks at the Conservative Political Action Conference (CPAC) annual meeting at National Harbor in Oxon Hill, Maryland, on March 2. Photo: Reuters

US President Donald Trump renewed criticism of the Federal Reserve and said the central bank’s tight monetary policy is contributing to a strong dollar and hurting America's competitiveness, Reuters reports.

“We have a gentleman that likes a very strong dollar at the Fed,” Trump was quoted as saying at the annual Conservative Political Action Conference in Oxon Hill, Maryland on Saturday.

“I want a strong dollar, but I want a dollar that’s great for our country not a dollar that is so strong that it is prohibitive for us to be dealing with other nations.”

Trump, who has made the economy a key part of his political platform, has repeatedly criticized the Federal Reserve and its chairman, Jerome Powell, for raising interest rates.

The US central bank, after raising interest rates four times last year, has signaled recently that it will be “patient” before tightening monetary policy further.

“We have a gentleman in the Fed that loves quantitative tightening. We want a strong dollar, but let’s be reasonable,” Trump said. “Can you imagine if we left interest rates where they were .... if we didn’t do quantitative tightening, this would lead to a little bit lower dollar.”

A weaker currency generally makes a country’s exports more competitive.

Powell has said he will not be swayed by political pressure and gave a clear assertion of the Fed’s independence in early January when he said that he would not resign even if Trump asked him to do so.

That followed reports in mid-December that Trump had discussed with his advisers the feasibility of firing Powell after the Fed raised rates again.

The Fed has been trimming its US$4 trillion balance sheet by as much as US$50 billion a month, which investors say has been tightening financial conditions.

The Fed’s benchmark overnight lending rate currently is within a range of 2.25 percent to 2.50 percent.

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