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Trump calls on Fed to slash interest rates

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He says move will send economy 'up like a rocket'

WASHINGTON : US President Donald Trump, in perhaps his most unorthodox statement yet on monetary policy, called for the US Federal Reserve to act as if the country was back in the throes of recession, with sharp interest rate cuts and renewed "quantitative easing" to pump trillions of dollars into the economy.

As Fed officials met in Washington for their latest policy discussion, Mr Trump on Tuesday tweeted that it would send the US economy "up like a rocket if we did some lowering of rates, like one point, and some quantitative easing".

It would also likely prove destabilising to global and US financial markets that would have to adjust to a seemingly capricious decision to cut US interest rates nearly in half for no obvious reason and absorb an uncertain amount of new US dollars.

Much smaller, unexpected shifts in policy have led to large swings in the value of the dollar, and put developing countries and their financial institutions under stress.

The Fed's target interest rate currently is set at a range of between 2.25 per cent and 2.5 per cent. Reductions of a full percentage point last occurred during the onset of the 2007 to 2009 recession.

Mr Trump's remarks show the ongoing tension between the White House and the Fed, even though four of the current five members of the central bank's board of governors were chosen for their jobs by the president.

In recent weeks his efforts to name more overtly partisan supporters to the Fed have run into opposition from Republicans on Capitol Hill, prompting potential nominee Herman Cain to withdraw from consideration and leaving potential nominee Stephen Moore's fate in doubt.

Mr Trump's anger at the Fed comes despite recent data showing the economy continuing to grow, and despite the fact that equity markets have regained much of their value since a sharp drop last fall.

Mr Trump blamed that sell-off on the Fed's December rate increase - its fourth of the year - and in effect has asked the Fed to take back all of its rate changes since 2017.

Current growth of 3.2 per cent is "doing very well... but with our wonderfully low inflation, we could be setting major records", Mr Trump said in a tweet.

Mr Trump's criticism of the Fed was prefaced by some admiring comments about China.

"China is adding great stimulus to its economy while at the same time keeping interest rates low," he said. - REUTERS