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New Trump attack on central bank: – Would you do exactly the opposite – Donald Trump – Stock Exchange and Finance



The US president continues to attack the US Federal Reserve.

The reason is that the bank is trying to change the ultra-stimulating monetary policy that it was leading in the period after the financial crisis, after the interest rate rises several times.

At the same time, President Donald Trump has set tough targets for the country's growth, which now stands at around 3%.

He would like to have even more growth and even faster stock market speeds, despite the fact that they have increased significantly after the fall in late 2018.

"If the Fed is doing its job properly, which is not, the stock market would be another 5,000 to 10,000 points, and the gross national product would be much more than four percent instead of three percent" Trump writes through the messaging service on Twitter.

Read more: Trump wants the central bank to set interest rates

You want a rocket speed

Trump is probably showing the Dow Jones Index, which consists of 30 major US companies. Last year Dow Jones fell from 24,700 points to 23,300 points. This year the index again rose to 26,400 points, which is close to the record level since October.

Thus, according to Trump, the index was supposed to be on a solid record level of 31,400 points to 36,400 points, unless the central bank had put a mood amortizer.

Until last week, the president said the US economy would be dropped as a rocket if the central bank does not stop withdrawing its stimulus, according to CNBC.

There are fears that the season in US results, which began on Friday, could be the worst in the last three years. Analysts believe that companies will find it difficult to track strong figures from last year, and this could trigger the stock market amortization.

Read more: – Can pull the air out of the balloon on the market

At the same time, there is still uncertainty about trade talks with China, after countries imposed customs duties on goods to others.

It slows the economy

Trump's complaint against the central bank's policy is that it has interrupted the stimulus.

"Quantitative tightening kills, the exact opposite should be done," Trump writes further on his Twitter message Sunday.

The term quantitative tightening is used to return central banks to easing the monetary policy they have provided in the form of buying securities that will stimulate the economy.

Now these documents will be re-sold, which will give them a tightening effect on the economy and will set the depreciation of growth. In addition, the central bank has raised interest rates nine times since the end of 2015 to 2.5 percent, according to the trading economy.

Earlier, Trump Financial Advisor Larry Kudlow argued that the central bank should cut interest rates by 0.5 percent, according to CNBC.

There is a risk associated with the continuation of the stimulation of the economy and through low interest rates, the purchase of securities with fixed income and the use of public money. In the worst-case scenario, this can create increased inflation, which reduces the purchasing power of people and thus can damage corporate earnings.

Brakes in the housing market

The increase in interest rates has contributed to the slowdown of parts of the economy, especially in the housing market, but the US is still rising, and unemployment is the lowest in decades, while inflation is close to the central bank's target of two percent, writes Bloomberg.

Trump recently criticized Governor Jerome Powell, who Trump chose to replace Janet Yellen. He also had to discuss the possibility of hitting Powell.

The central bank seems to be listening to Trump – or at least in the markets. Since stock markets and oil prices fell at the end of 2018, in January, Powell announced that the central bank is no longer in a hurry to raise interest rates.

In March, Powell told us that the interest rate should be calm by 2019.

The new signals have contributed to the stock markets to return in time. The broad index S & P 500 dropped by as much as 6% last year, but grew 16% in 2019 to 2,900 points. That's about one percent below the September record.


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