Fed sees U.S. economy on track, Trump renews Fed gripes
By Ann Saphir and Jonnelle Marte SAN RAMON, Calif./NEW YORK (Reuters) - U.S. central bankers on Wednesday expressed confidence they have borrowing costs at the right level to sustain growth and lift inflation to healthier levels, despite what businesses say is a lingering drag from uncertainty over U.S.
By Ann Saphir and Jonnelle Marte
SAN RAMON, Calif./NEW YORK (Reuters) - U.S. central bankers on Wednesday expressed confidence they have borrowing costs at the right level to sustain growth and lift inflation to healthier levels, despite what businesses say is a lingering drag from uncertainty over U.S. trade policy.
But even during the signing ceremony for a trade deal with China that promises to clear up some of that uncertainty, President Donald Trump reprised a long-running gripe against the Federal Reserve, and appeared to identify a possible new Fed chair who might fix the problem.
"I could have used you a little bit here," Trump said to former Fed Governor Kevin Warsh, who made no secret in Trump's first year in office that he wanted the Fed chair job. Trump picked Jerome Powell instead, a move he has since said he regretted. "Why weren't you more forceful when you wanted that job? ... I would have been very happy with you. But Kevin, thank you for being here. You understand that very well, right?"
From there, Trump launched for the first time in about a month into what has been a recurrent complaint against the Powell Fed.
“We're the number one [economy] in the world by far, and we have to pay for our money," Trump said, contrasting U.S. borrowing costs with Europe's negative interest rates, a function of that region's slower growth and dimmer outlook. "Our interest rates are set high by the Fed. Our dollar's very high.”
That is not the way Fed policymakers see it.
Last year, with Trump waging a trade war with China and other countries, and Europe slowing, the U.S. central bank cut rates three times to a target range of 1.5% to 1.75%, a level it expects to stick to for the time being.
Rates are currently in a "good place," unless there is a substantial change in inflation, Philadelphia Fed President Patrick Harker said on Wednesday in New York, adding that low rates can encourage excessive risk-taking.
Dallas Fed President Robert Kaplan, speaking at a separate event in New York, voiced renewed scepticism that negative rates can help economic growth and said he expects the U.S. economy to grow at about 2% this year, slower than last year but still fast enough to push down on unemployment in his view.
"My expectation is inflation will gradually go back up to target and reach a sustainable 2% in 2021," San Francisco Fed President Mary Daly said at the Bishop Ranch Executive Forum in San Ramon, about an hour's drive from her bank's headquarters.
She too said the economy will grow at about 2%, keeping unemployment at its current 3.5% level and pushing up wages by between 3% and 3.5%. "If it went up a little bit more, that would only get us to our inflation target a little bit faster," Daly said.
The three policymakers spoke on the same day Trump and Chinese Vice Premier Liu He signed an initial trade deal at the White House after 18 months of tit-for-tat tariffs between the world's two largest economies that has uprooted supply chains and slowed global growth.
A survey conducted by the Fed in late 2019 and released on Wednesday showed that uncertainty over U.S. trade policy continued to hurt firms, even as the U.S. economy expanded at a modest pace.
"In many districts, tariffs and trade uncertainty continued to weigh on some businesses," the Fed said in its report, compiled from questionnaires and interviews with business contacts across the country.
Powell's term as Fed chair runs to 2022, a term he expects to complete despite searing criticism from Trump. Americans choose their next president at elections in November, and if Trump keeps his job as president he has made it clear he would replace Powell.
Warsh was a Fed policymaker for five years until 2011, when he resigned in the wake of the Fed's decision to launch its second round of bond-buying, a move Warsh worried would exacerbate what he viewed as already overly accommodative monetary policy.
(Reporting by Kate Duguid in New York and Lindsay Dunsmuir and Lucia Mutikani in Washington; Editing by Tom Brown and Sonya Hepinstall)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.