Trump Again Calls on Fed to Cut Interest Rates

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The Federal Reserve flagged signs that inflation has weakened despite solid growth as it reiterated its determination to be "patient" before moving interest rates again.

The central bank will disclose its policy decisions in a statement and in a news conference by Chairman Jerome Powell.

The low-rate policy is helping to keep borrowing costs down and supporting an economy that's been growing steadily since late past year. Treasury Secretary Steven Mnuchin had to call major bank CEOs from the pool in Cabo San Lucas and reassure Americans that the Treasury Department stood prepared to ensure the soundness of the financial system.

"Steve Moore, a great pro-growth economist and a truly fine person, has chose to withdraw from the Fed process", Mr Trump said on Twitter, moments after Mr Moore told Bloomberg and The Wall Street Journal that he would stay in the race.

Since then, Trump has pushed his luck.

The Fed has a seven-member board, but has had openings for many months.

White House officials including Larry Kudlow, Trump's top economic adviser, have recommended that the Fed cut rates by half a point. Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening.

The Fed ignored the president's demand, keeping rates unchanged.

US President Donald Trump posted this tweet a day prior to the Fed's FOMC statement and interest rate decision. That's because a rate cut amounts to a stimulus, and many people will ask why the economy needs a boost when it's already humming along just fine.

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The intensity of Trump's attacks against the Fed has raised eyebrows about political interference with the Federal Reserve's independence.

The reason the Fed flinched then and not now is that the stock market tanked then, but not now.

He said that was because "the global economy appears to be coming through its soft patch after first-quarter economic data proved stronger than expected" in the US, China and eurozone economies.

The Fed also expressed a more upbeat view of the economy, saying "economic activity rose at a solid rate".

I should note that being reactive to the market like this is not necessarily a bad thing.

In addition to weighing economic developments, Fed officials have endured a steady criticism from Trump.

Interest rate futures also reversed direction, signaling a lower degree of confidence the next Fed move would be a rate cut, exactly the point Powell was driving at in a "stay-the-course" message, said analysts at Cornerstone Macro. Clearing up that misunderstanding didn't mean shifting the underlying policy the Fed was making. And in fact, their bets indicate a roughly 66% likelihood that the Fed will cut rates before year's end.

"The (gold) market is under pressure after a lack of follow through on the upside as prices could not break above $1,290 after several attempts and there was nothing important out of the FOMC", said Afshin Nabavi, senior vice president at MKS SA. The stock market did.

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