In prepared remarks, Fed Chairman Jerome Powell is set to say that business investment has “slowed notably” and that trade tensions and weak global growth “continue to weigh” on the U.S. economy, a strong signal that the Fed is likely to lower the benchmark interest rate in July, the Washington Post reports.
“President Trump wrapped up the weekend as he started it, jawboning the Federal Reserve to lower interest rates at a time when he may be sizing up his two latest picks for Fed governor as successors to Chairman Jerome Powell,” Bloomberg reports.
“The fresh criticism is consistent with ideas that the president is laying the groundwork to replace Powell when the chairman’s term is up in 2022, assuming Trump is re-elected, or will attempt to do so earlier if the Fed doesn’t bend quickly enough to his will.”
President Trump took aim at the Federal Reserve on Saturday, labeling it the “most difficult problem” the U.S. faces, The Hill reports.
Said Trump: “Strong jobs report, low inflation, and other countries around the world doing anything possible to take advantage of the United States, knowing that our Federal Reserve doesn’t have a clue! They raised rates too soon, too often, & tightened, while others did just the opposite.”
He added: “As well as we are doing from the day after the great Election, when the Market shot right up, it could have been even better – massive additional wealth would have been created, & used very well. Our most difficult problem is not our competitors, it is the Federal Reserve!”
President Trump accused China and Europe of playing a “big currency manipulation game” and said the United States should match that effort, a move that directly contradicts official U.S. policy not to manipulate the dollar’s value to gain trade advantages, the AP reports.
Trump said if America doesn’t act, the country will continue “being the dummies who sit back and politely watch as other countries continue to play their games — as they have for so many years.”
“As President Trump named his picks to fill two influential seats on the Federal Reserve’s Board of Governors, the price of gold surged. That may be because one of the them, Judy Shelton, is a believer in the return to the gold standard, a money policy abandoned by the U.S. in 1971,” CBS News reports.
“Shelton is raising eyebrows among mainstream economists for her views, which include slashing the Fed’s benchmark rate to zero and pegging the value of the dollar to gold prices.”
New York Times: “The investigation includes a review of Deutsche Bank’s handling of so-called suspicious activity reports that its employees prepared about possibly problematic transactions, including some linked to President Trump’s son-in-law and senior adviser, Jared Kushner.”
“President Trump has told confidants as recently as Wednesday that he believes he has the authority to replace Jerome Powell as chairman of the Federal Reserve Board,” Bloomberg reports.
“In Trump’s line of thinking, he could demote Powell to be a board governor, but isn’t planning to do so right now.”
“Federal Reserve Chairman Jerome Powell said he intends to serve his full four-year term as head of the Federal Reserve, after President Trump asked White House lawyers earlier this year to explore options for removing him,” Bloomberg reports.
Said Powell: “I think the law is clear that I have a four year term, and I fully intend to serve it.”
Federal Reserve officials held their benchmark interest rate steady on Wednesday, but hinted they would cut rates in the months ahead if the economic outlook weakens, the Wall Street Journal reports.
CNBC: “The decision came amid divisions over what is ahead and still leaves open the possibility that policy loosening could happen before the end of the year depending on how conditions unfold.”
“The White House explored the legality of demoting Federal Reserve Chairman Jerome Powell in February, soon after President Trump talked about firing him,” Bloomberg reports.
“The White House counsel’s office weighed the legal implications of stripping Powell of his chairmanship and leaving him as a Fed governor, the people said, in what would be an unprecedented move. A replacement would have to be nominated by Trump and confirmed by the Senate.”
President Trump on Saturday predicted a stock market crash if he doesn’t win re-election in 2020.
Said Trump: “The Trump Economy is setting records, and has a long way up to go. However, if anyone but me takes over in 2020 (I know the competition very well), there will be a Market Crash the likes of which has not been seen before!”
President Trump “slammed Federal Reserve Chairman Jerome Powell again this week, insisting that Powell’s actions have prevented the economy from soaring even higher and declaring he’s out of patience with the man he picked to lead the nation’s central bank,” ABC News reports.
Trump also said he was “allowed” to criticize Powell and claimed it was commonplace in the “old days” for a president to “settle” with the bank’s chairman.
Said Trump: “You know, in the old days, they used to speak to the head of the Federal Reserve often. And it was … very much a part of the administration from the standpoint as they’d talk and they’d really settle. You have no idea how important it is.”
“A month ago, Fed Chairman Jerome Powell played down speculation of a rate cut this summer. Now officials at the central bank face a darker economic outlook and heightened trade tensions, making a rate cut possible—if not at their meeting on June 18-19, then in July or later,” the Wall Street Journal reports.
“The officials need to decide what would trigger such action, how much more information they want before making a decision and how to signal their intentions and plans. They are to begin their customary premeeting quiet period at the end of this week.”
Judy Shelton, a senior U.S. official who is being vetted for a job on the board of the Federal Reserve, told the Financial Times that the the central bank wields undemocratic, Soviet-style powers over markets.
Said Shelton: “How can a dozen, slightly less than a dozen, people meeting eight times a year, decide what the cost of capital should be versus some kind of organically, market supply determined rate? The Fed is not omniscient. They don’t know what the right rate should be. How could anyone?”
She added: “If the success of capitalism depends on someone being smart enough to know what the rate should be on everything… we’re doomed. We might as well resurrect Gosplan.”
A new survey of financial executives shows that fallout from Brexit has helped New York overtake London to become the world’s pre-eminent financial center, Reuters reports.
Politico: “The Dow Jones industrial average plunged more than 700 points, or 2.7 percent, in afternoon trading, after a flurry of belligerent tweets from President Trump — and quick retaliation from China in the form of new tariffs — threw gut punches at hopes for a deal between the two nations.”
“The sell-off framed a central conflict inside the White House — and seemingly within the president’s own mind. Trump loves a booming stock market, which he tracks obsessively, and views it as an indicator of success on par with his approval rating. At the same time, he loves his power to unilaterally impose tariffs, and sees winning tough concessions from China as key to his 2020 reelection bid.”
“But those two political imperatives are once again at odds.”
“President Trump’s next nominee to the Federal Reserve board may be one of his former domestic policy aides who now oversees economic policy studies at the conservative Heritage Foundation,” the Wall Street Journal reports.
“Paul Winfree, who was deputy director of the White House Domestic Policy Council, is under consideration for one of the two open positions on the Federal Reserve Board.”