TD Cowen analysts said claims from U.S. President Donald Trump- that the Federal Reserve failed to stop inflation, and that he would fix price pressures with policy instead- represented a positive for central bank independence , News.az reports citing Investhing.
TD also called Trump’s expression of support for bank deregulation a positive.
Trump on Wednesday criticized the Fed and Chair Jerome Powell for having “failed to stop the problem they created with inflation,” and that he would do it by “unleashing American energy production, slashing regulation, rebalancing international trade and reigniting American manufacturing.”
Trump also claimed that the Fed had “done a terrible job on bank regulation,” and that he would move the responsibility of cutting regulation to the Treasury.
TD said they viewed Trump’s comments as a positive, given that they implied that Trump could fix inflation with policy and without the need to make changes to the central bank.
“This reinforces our view that Powell will serve out his full term and that Trump will not seek to fire other Federal Reserve governors… Trump's scoreboard is the stock market. And the market wants an independent Federal Reserve,” TD wrote in a note.
TD also said it was a positive for Trump to support bank deregulation, although it was unlikely that he could shift the task to the Treasury through an executive order.
The brokerage said that Trump’s lack of nominations for key bank regulatory roles, including the Comptroller, FDIC Chair and vice chair of supervision at the Fed, indicated that bank policy was not a priority for the President, which lessened the prospect of stricter regulations on the sector.
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Trump’s comments came in response to the Fed leaving interest rates unchanged on Wednesday and striking a hawkish stance on the prospect of further monetary easing.
“We see this entire exercise as a good reminder of what to expect from Trump over the next four years… he blamed inflation on the Federal Reserve being distracted by wokeness while positioning himself to take credit when inflation comes down further and the Fed resumes interest rate cuts,” TD analysts said.
Trump had earlier called on the central bank to deepen its interest rate cuts and boost the economy. But Fed Chair Powell had pushed back against this notion, or that he would yield to government pressure to alter monetary policy.
TD also called Trump’s expression of support for bank deregulation a positive.
Trump on Wednesday criticized the Fed and Chair Jerome Powell for having “failed to stop the problem they created with inflation,” and that he would do it by “unleashing American energy production, slashing regulation, rebalancing international trade and reigniting American manufacturing.”
Trump also claimed that the Fed had “done a terrible job on bank regulation,” and that he would move the responsibility of cutting regulation to the Treasury.
TD said they viewed Trump’s comments as a positive, given that they implied that Trump could fix inflation with policy and without the need to make changes to the central bank.
“This reinforces our view that Powell will serve out his full term and that Trump will not seek to fire other Federal Reserve governors… Trump's scoreboard is the stock market. And the market wants an independent Federal Reserve,” TD wrote in a note.
TD also said it was a positive for Trump to support bank deregulation, although it was unlikely that he could shift the task to the Treasury through an executive order.
The brokerage said that Trump’s lack of nominations for key bank regulatory roles, including the Comptroller, FDIC Chair and vice chair of supervision at the Fed, indicated that bank policy was not a priority for the President, which lessened the prospect of stricter regulations on the sector.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads.
Trump’s comments came in response to the Fed leaving interest rates unchanged on Wednesday and striking a hawkish stance on the prospect of further monetary easing.
“We see this entire exercise as a good reminder of what to expect from Trump over the next four years… he blamed inflation on the Federal Reserve being distracted by wokeness while positioning himself to take credit when inflation comes down further and the Fed resumes interest rate cuts,” TD analysts said.
Trump had earlier called on the central bank to deepen its interest rate cuts and boost the economy. But Fed Chair Powell had pushed back against this notion, or that he would yield to government pressure to alter monetary policy.
