Trump calls US Federal Reserve his 'biggest threat'

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That reinforced expectations that USA yields will rise further despite President Donald Trump's view that the Fed is tightening too much.

Former Federal Reserve governor Randall Kroszner said recent criticism by Trump of the Fed would do little to dissuade the central bank from pursing policies as it sees fit for the economy.

"I told them, "You guys aren't ready yet, you're just not ready, ' because look, they've been taking $500 billion a year out of our country, it's time that we stop it", he told FOX Business" Stuart Varney.

The Fed is contending with how to manage one of the longest economic expansions on record without triggering a recession.

There is ample research on the US and elsewhere showing that a one-percentage-point increase in the budget deficit has the effect of raising interest rates a quarter of a percent, or more.

Emerging market assets were weighed down by the rising dollar and concerns about higher USA interest rates. "I also think there is enough doubt about current inflation as an infallibly reliable measure of current resource constraints that the continued gradual removal of accommodation is appropriate".

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The minutes from the meeting showed every Fed policymaker backed raising interest rates, pushing the dollar index to its firmest in a week and knocking emerging currencies that had befitted from a return of carry trade action. "A few" expected monetary policy would need to be "modestly restrictive", suggesting a Fed funds rate above the longer-run level, St. George Economics reported in today's Morning Report.

NO: The Federal Reserve has taken a measured approach to raising interest rates in reaction to a strong economy and signs of inflation. Shanghai's benchmark index closed at a near four-year low and China's premier warned of risks to the economy. Central bank officials were unified in voting last month to boost rates by a quarter point, the Fed's account of its September policy meeting shows.

A spokeswoman for the Fed declined to comment on the president's latest remarks. "We control what we do at the Fed".

"There was a pretty well-formed expectation that it would more likely showcase a Fed that's more confident and assertive debating tighter policy", said Richard Franulovich, head of FX strategy at Westpac Banking Corp in NY.

U.S. homebuilding dropped more than expected in September as construction activity in the South fell by the most in almost three years, likely held down by Hurricane Florence.

Asked if he thinks the current path of rate hikes is threatening economic growth, Quarles said it depends on one's expectations about the US economic trajectory. But the courts ruled in a case decades ago involving the Federal Trade Commission that this language has to involve more than a policy disagreement between the president and the Fed.

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