Published: Sat, August 24, 2019
Money | By Ethel Goodwin

Trump escalates attack on Fed chief as economic worries linger

Trump escalates attack on Fed chief as economic worries linger

Asian shares struggled to make any headway on Friday (Aug 23) as weak U.S. manufacturing activity and uncertainty over how much further the Federal Reserve would cut rates added to the general air of caution in markets buffeted by global growth fears.

Gold extended gains after Federal Reserve Chairman Jerome Powell said the USA economy faces "significant risks" from slowing global growth, bolstering expectations that the central bank will cut US interest rates further.

"Who is our bigger enemy, Jay Powell or Chairmain Xi?" Trump said he would respond to the new China tariffs later Friday.

Markets had been divided on what they thought Powell would say at the Jackson Hole, Wyoming, symposium, with some expecting him to announce a major stimulus measure while others believed he would downplay the chances of a September rate cut.

"Our economy is now in a favorable place, and I will describe how we are working to sustain these conditions in the face of significant risks we have been monitoring", he said.

"Setting trade policy is the business of Congress and the Administration, not that of the Fed", Powell said.

U.S. Treasury yields inched lower, with 10-year notes US10YT=RR last up 22/32 in price to yield 1.5351%, from 1.61% late on Thursday.

The president also announced he would slap further tariffs on Chinese imports, and will order postal carriers to search for and refuse packages of Fentanyl originating from China.

The International Monetary Fund has downgraded global growth, and the minutes of the Fed's last policy meeting revealed that officials fear the blowback from continued trade uncertainty will come back to bite the United States economy.

The Fed cut the benchmark interest rate last month for the first time in more than a decade, partly as insurance against the impact of trade uncertainties on the economy.

There was even a difference of opinion among the Fed members who favored a rate cut, the minutes showed, with some concerned most about subpar inflation and others anxious more about the threats to economic growth.

Powell described the rate reduction at the time as "a mid-cycle adjustment to policy, " telling reporters on July 31 that it wasn't the beginning of a long series of cuts.

"We still view the U.S". Trump said, misspelling the Fed chief's name in an unprecedented attack on the independent central bank. A survey showing a surprise uptick in euro zone business growth for August was offset somewhat by trade war fears knocking future expectations to their weakest in over six years.

Since the last meeting, the dollar has strengthened as the global economic outlook dimmed, raising the prospect for rate cuts overseas.

The president contends that lower rates in other countries have caused the dollar to rise in value and thereby hurt USA export sales.

The Fed went out of its way to highlight the reasons for the cut in three bullet points, citing signs of economic deceleration, risk management concerns and too low inflation.

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