SMM3 4: big mouth President Trump continued to allude to Powell on Saturday, saying that "there is a gentleman in the Federal Reserve who likes to raise interest rates." "I want a dollar that is good for our country, not a dollar that is so strong that it makes it difficult for us to do business with other countries," Trump said. "
Let's first review the economic data of the United States over the past two weeks.
On February 21, the United States released the initial value of Markit manufacturing PMI for February, with a public value of 53.7, a previous value of 54.9, and a forecast of 55.0.
February 28, the United States announced the fourth quarter of the actual GDP annualized quarterly rate, public value: 2.6, previous value: 3.4, expected: 2.2.
On March 1, the United States released an annual rate of the core PCE price index for December, with a public value of 1.9, a previous value of 1.9, and a forecast of 1.9.
In addition, personal spending data released on March 1, the University of Michigan consumer confidence index and February ISM manufacturing PMI were weaker than expected.
Although the data show that the US economy is cooling, the strong posture of the dollar has not changed, and the dollar is currently fluctuating back and forth between 95 and 97. Powell did not express his views on the number of interest rate hikes this year, but only repeatedly reiterated his patience with interest rate hikes. In Trump's view, Powell is not "pigeon" enough and still has hope for raising interest rates. Even "like to raise interest rates". Trump wants a weak dollar to boost exports and make up for the trade deficit. The latest figures show that the US merchandise trade deficit soared to $79.5 billion in December, an all-time high. This is terrible for Trump! Last year, Trump repeatedly attacked countries around the world in the field of trade, trying to wipe out the trade deficit with a tariff war to benefit the American people, and to use Trump's mantra to make America great again. However, the result of the implementation of the tariff war is terrible. As soon as the trade deficit of the United States expands and expands again and again, it is clear that the United States is in a different direction, and the so-called intention to plant flowers will not bloom. In this case, Trump is more willing to lower the exchange rate to boost exports.
But as an institution independent of the US government, the Federal Reserve will never succumb to Trump's authority. Powell and other officials have their own understanding of monetary policy. This is related to the flexibility of monetary policy and the ability to rescue the economy at a critical moment. The independence of monetary policy should not be provoked by others, even the President of the United States, which is certain. On February 25, former Federal Reserve Chairman Yellen blasted Trump, saying he didn't understand the economy at all. Yellen also expressed her dissatisfaction with Trump's efforts to reduce the trade deficit, saying there was no point in bilateral concerns about the trade deficit. It is not a suitable policy objective.
On the one hand, Powell has to act on the data and keep the possibility of raising interest rates, and on the other hand, Trump has repeatedly uttered words condemning the strong dollar. A key question now may be whether the trade deficit should be wiped out and whether it really hurts the American people and the American economy. If not, the premise is wrong, then Trump waged a global trade war, called for a weak dollar, launched isolationist policies, and all kinds of retreat were wrong, then Trump is wrong again and again, after all, maybe so, maybe. Only time will tell.
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