Trump blasts Fed chair as central bank issues rates cut, Latest Business News - The New Paper

Trump blasts Fed chair as central bank issues rates cut

This article is more than 12 months old

WASHINGTON : The US Federal Reserve cut interest rates again on Wednesday to help sustain a record-long economic expansion but signalled a higher bar to further reductions in borrowing costs, eliciting a fast and sharp rebuke from President Donald Trump.

Describing the US economic outlook as "favourable," Fed chair Jerome Powell said the rate cut was designed "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions.

"If the economy does turn down, then a more extensive sequence of rate cuts could be appropriate," Mr Powell said in a news conference after the Fed announced it had lowered its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75 per cent to 2.00 per cent.

It was the second Fed rate cut this year.

But, Mr Powell said, "what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate", noting that the US labour market was strong and inflation was likely to return to the Fed's 2 per cent annual goal.

"We are going to be highly data-dependent... We are not on a pre-set course, we are going to be making decisions meeting by meeting," Mr Powell said, adding that the Fed would stop cutting rates "when we think we've done enough".

Mr Trump blasted Mr Powell, saying the central bank chief had "No 'guts,' no sense, no vision!"

"A terrible communicator," Mr Trump tweeted before Mr Powell had even begun his news conference.

Underscoring divisions within the central bank, the quarter-point rate cut drew dissents from three of the 10 voting policymakers.

Kansas City Fed president Esther George and Boston Fed president Eric Rosengren called for no rate cut, and St. Louis Fed president James Bullard wanted a bigger half-point rate cut. - REUTERS