Trump, Powell met Monday at White House to discuss economy
WASHINGTON (Reuters) - U.S. President Donald Trump and Federal Reserve Chair Jerome Powell met at the White House on Monday morning, their second meeting since Powell started the job in February 2017 and soon after became the target of frequent criticism from the president who had appointed him.
The Fed announced the meeting in a morning press release, noting they met “to discuss the economy, growth, employment and inflation.”
“Everything was discussed including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.,” Trump tweeted soon after, calling the session “good & cordial.”
The Fed’s wording closely followed its description of Powell’s first meeting with Trump, this past February, over a dinner that also included Vice Chair Richard Clarida.
Trump’s tweet marked a change in tone. The president in recent months derided Powell and colleagues as “pathetic” and “boneheads” for not cutting interest rates, and in August labeled Powell personally as an enemy of the United States on a par with China leader Xi Jinping.
The Fed in its statement was careful to note what wasn’t discussed: Powell’s expectations for future monetary policy. Trump has for more than a year charged the Fed with undermining his economic policies by, in his view, keeping interest rates too high, and depriving the United States of what Trump feels are the benefits of the negative rates of interest set by the European and Japanese central banks.
The U.S. central bank has cut rates three times this year - in part to offset what it views as damage done by the Trump administration’s trade war with China. But after their last meeting, in October, policymakers signaled they would lower rates no further unless the economy takes a serious turn for the worse.
Less than 24 hours after that decision, Trump laid into Powell again, saying people are “VERY disappointed” in him and the Fed. And only last week, Trump lobbed another dig in a tweet that noted inflation was low: “(do you hear that Powell?)”
Powell “did not discuss his expectations for monetary policy, except to stress that the path of policy will depend entirely on incoming information that bears on the outlook for the economy,” the Fed said in its statement.
Powell appeared before congressional committees twice last week, and the Fed said his comments to Trump were “consistent” with his statements to lawmakers.
“Chair Powell said that he and his colleagues on the Federal Open Market Committee will set monetary policy, as required by law, to support maximum employment and stable prices and will make those decisions based solely on careful, objective and non-political analysis.”
The meeting included Treasury Secretary Steven Mnuchin.
Powell met with Trump in February, and in each of the three following months the two had a brief phone conversation. That compares with the three times his predecessor, Janet Yellen, met President Barack Obama at the White House; Yellen also met with Trump during her final year as Fed chair.
Powell’s has made much more extensive and deliberate efforts to court members of the House and Senate, even as Trump expressed regret for appointing Powell and reportedly explored whether he could remove him.
Fed chairs are appointed to four-year terms by the president, but once confirmed by the Senate are intended to be insulated from White House political pressure over how to manage monetary policy. They can only be removed “for cause,” not over a disagreement over policy.
Stocks Mixed Amid Trade Paralysis; Aussie Declines: Markets Wrap
Asian stocks drifted on Tuesday as investors continued to await signs of progress in U.S.-China trade negotiations, while Treasuries held modest gains.
U.S. futures fluctuated, Japanese shares mostly erased early losses and South Korean shares dropped. Hong Kong equities climbed again despite further unrest in the city, further recouping some of last week’s losses. The S&P 500 notched another record high on Monday in a lackluster session. Oil prices added to their Monday decline. Australia’s dollar fell after the minutes of this month’s central bank meeting showed there was a case for cutting interest rates.
Markets around the world are in a holding pattern, sensitive to any developments on trade after months of closely followed negotiations. Word that White House would extend a license to allow U.S. companies to do business with Chinese telecom firm Huawei competed with reports suggesting Beijing was skeptical about reaching a broad deal anytime soon.
One challenge for stocks is that their 21% advance this year leaves little reason for some investors to bid prices up yet further.
“We don’t think that there is much scope for global equities to receive a further boost from a trade deal along the lines of what is being reported,” Simona Gambarini, a markets economist at Capital Economics, wrote in a note.
Meantime, the dollar dipped on Monday after news that Federal Reserve Chairman Jerome Powell met with President Donald Trump at the White House. Trump tweeted that topics discussed included dollar strength and negative interest rates. The Fed said Powell’s remarks were “consistent” with his recent public comments.
Here are some key events coming up this week:
U.S. economic indicators due for release include housing starts Tuesday and initial jobless claims on Thursday.
Britain holds its first televised leadership debate before next month’s election Tuesday.
Federal Reserve speakers this week include district bank presidents John Williams, Loretta Mester and Neel Kashkari.
European central bankers speaking this week include European Central Bank President Christine Lagarde, Bundesbank chief Jens Weidmann, along with Yves Mersch, Luis de Guindos, Pablo Hernandez de Cos and Philip Lane.
China announces its loan prime rates, a benchmark for borrowing costs, on Wednesday.
These are the main moves in markets:
The yen was flat at 108.66 per dollar.
The offshore yuan was flat at 7.0283 per dollar.
Bloomberg Dollar Spot Index was flat.
The euro was at $1.1071.
The British pound traded at $1.2954.
The yield on 10-year Treasuries was at 1.81%.
Australian 10-year yields fell about four basis points to 1.12%.
West Texas Intermediate crude fell 0.2% to $56.96 a barrel.
Gold was little changed at $1,470.29 an ounce.
Hour level: Spot gold overnight market is surprising, the technical side is good, and the news situation is not optimistic, the market reversed, returning to the 1470 mark from below 1460, eventually leading to more confusing short-term market. It can be seen that after the sharp adjustments overnight, the uptrend channel on the Hour Line is clear and continues to enhance the situation.
If the day can not rise to achieve a large entity breakthrough, the hour line has the risk of forming a double top callback and 2B sell structure. In view of this, the short-term market is divided into three levels:
First, the 50% Fibonacci retracement of the previous below the 1480-83 range, maintaining a short situation;
Second, below 1474-70, technically, conservative short-selling;
Third, below 1460, short positions. It can be seen that gold has not completely got rid of the short position, but the overnight K-line pattern belongs to the longer shadow line, indicating that the 1460-56 range is strong, and it is not excluded that the long position has started. Once the gold price breaks through 1480-83 Interval is a long chance.
Daily line level: the overall situation of the gold daily line changed little after overnight volatility. Although the gold price struggled to hold the support zone near 1460, it did not complete the breakthrough. At present, the daily line is in a relatively neutral position in the downtrend channel, and has limited clues for medium and long-term operations. It is recommended to stay on the sidelines.
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