The current trade war instigated with the increased in the tariff rates by the President Trump’s Administration has caused the Central Bank to gradually raise the borrowing costs. However, President Trump is showing concerns to the meeting scheduled with the officials of Federal Reserves. According to the economists, it is expected that there would be no increase in the interest rates before the officials gather on Wednesday. It would be a mistake to consider that President Trump’s recent complaint against the US Central Bank over the increased borrowing cost has stopped the rates to hike.
According to the statement released by the Head of the global rates strategy, Priya Mishra, simply a pressure from the president will not impact on anything; ultimately, steps would be taken for the betterment of the economy. However, considering the recent economic data there’s an urgency to increase the rate hikes following the Fed moves to the meeting. So far, we all know that the Fed does not attend any gathering except their quarterly media briefing, until and unless the situation is very critical Fed don’t attend the gathering.
Investors are expecting a third increase in rates in the year of 2018, Chairman Jerome Powell who has promised to hold a press conference after every Fed meeting has said in a statement that for the time being the best way to forward is to gradually increase federal fund rates. The unemployment has witnessed4% in the month of June, which was the just half a percent below the highest unemployment rates of all time. The increase in the rates would balance the supply and demand of the economy to avoid the situation of fast inflation over the economy. Powell says that monetary tightening is unpopular with the politicians.