Fed signals more rate hikes despite emerging market 'stress'

Trump: 'My Biggest Threat Is The Fed' – Talking Points Memo

He said that he expects relatively strong growth could continue without running into economic constraints, but that the Fed should pay attention to other indicators of tightness and overheating in addition to inflation, such as direct measures of labor utilization or signs of shortages and bottlenecks in production.

The main focus for the Treasury Department has been China, . which U.S. President Donald Trump has criticized for weakening the yuan, . helping Chinese exporters and lessening the impact of tariffs.

"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. Critics have expressed concern that his continual attacks on the Fed, which began in the summer, threaten its need to operate free of political pressure from the White House or elsewhere to properly manage interest rate policy.

Compared to the minutes of Fed's previous meeting held in August, the September minutes appeared to show less discussion around the prospects that a recession might be lurking around the corner. The next rate rise could come as soon as December. Raising rates is the Fed's way of lowering the risk of runaway inflation, which happens when competition for labor and a shortage of goods in a fast-growing economy leads to big increases in wages and prices. The Dow Jones Industrial Average jumped 547 points. Treasury Secretary Steven Mnuchin says Trump respects the independence of the Federal Reserve and simply favors low interest rates. Mnuchin said Trump's complaints simply reflected his preference for low interest rates.

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Others said that, to avoid creating asset bubbles or having inflation run above the Fed's 2 per cent target for too long, the central bank would have to raise rates "above their assessments of its longer-run level".

In his first two years in office, Trump has had the rare opportunity to nominate or re-nominate officials for six of the Fed board's seven seats.

This would move U.S. interest rates slightly above what policymakers say is "neutral" - that is, neither slowing nor speeding the economy - but some participants said the Fed would need to go even further than that. 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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