US Treasury secretary: Economy strong, stock drop a 'natural correction'

US Treasury secretary: Economy strong, stock drop a 'natural correction'

US Treasury secretary: Economy strong, stock drop a 'natural correction'

Treasury Secretary Steven Mnuchin said Friday that President Donald Trump respects the independence of the Federal Reserve and the president's recent comments were simply a reflection of the fact that he favors low interest rates.

"We didn't get much of one this year, but we are still in that negative two-week period", Cashin said on CNBC's Closing Bell.

"They lived too well for too long and frankly I guess they think that the Americans are stupid people".

Similarly, every time the Fed raises rates, the cost of interest on our debt and the cost of running the USA government goes up dramatically thus reducing available money to spend on infrastructure and salaries of government employees.

Chinese representatives said they did not want a further depreciation of the yuan exchange rate, Mnuchin said.

"Our objective would be that the [language on} currency issues we would like to include in future trade agreements", he said. "But I really disagree with what the Fed is doing".

"I think they're making a big mistake", Trump said during a broadcast of Fox & Friends.

Trump has by turns called the Fed "crazy" and "loco" and said it was being "too aggressive in raising rates", blaming the institution for the market declines that saw the benchmark Dow Jones Industrial Average lose almost 1,400 points in two days. And Washington's extreme fiscal laxity - deficits of well over a trillion dollars a year loom, with unemployment at just 3.7 percent - means there'll be little or no scope for strong fiscal expansion to deal with that recession.

Global stock markets fell again on Thursday as investors anxious about signs of slowing growth, rising trade tensions and higher interest rates.

The December tax cuts that Mr Trump championed, as well as the increased federal spending in this year's budget, are expected to do what the president intended by juicing the economy - but when unemployment was already low and the economy growing at a good rate. "We may go past neutral, but we're a long way from neutral at this point, probably". Asked if he might dismiss the Fed chair, Trump replied: "No, I'm not going to fire him".

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The average rate for a 30-year fixed-rate mortgage rose to 4.7 percent last week, from below 4 percent at the end of 2017, according to data from Freddie Mac. Trump has imposed $200 billion in tariffs on China and is threatening to levy even more.

The Chinese currency has been falling in value against the dollar in recent months, raising concerns that China is devaluing its currency as a way to make Chinese goods more competitive against USA products.

New York Fed President John Williams said he expects the Federal Reserve to return to its target interest rate to normal or neutral levels within "the next year or so".

Add it all up, and it means the world's most savvy investors are betting that the USA economy will keep growing at a healthy clip, without inflation emerging, but that the Fed will have to keep raising rates well above current levels in order to prevent that inflation. The Fed is an independent body and presidents in recent decades have avoided commenting publicly on its actions.

He spoke after International Monetary Fund (IMF) chief Christine Lagarde defended central bank rate hikes in a veiled rebuke to Trump. Bush blamed Alan Greenspan's slowness in cutting interest rates for his failed run for a second term in 1992.

Powell has "reset market expectations " Parts of the economy and the stock market that are sensitive to higher interest rates are also useful gauges for the impact of Fed policy.

Trump, who departed for Erie just before markets closed on Wednesday, was briefed by officials about the sell-off.

For stocks, rates seem to be rising due to a strengthening economy, which should eventually feed through into corporate profits.

"Later, White House Press Secretary Sarah Sanders said the fundamentals and the future of the United States economy remain incredibly strong". Never mind that Trump has been president for fewer than two years of a nine-plus year bull market.

"They're being too aggressive", Trump said.

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