The US President has spent months waging war on the chairman of the federal reserve. Donald Trump has heavily criticized Jerome Powell for raising interest rates.
Trump says this is the biggest threat to the US economy. Trump has even blamed the Fed for the recent stock market sell off and plans by General Motors to lay off 14,000 employees.
It is rare for a US president to openly attack the head of the federal reserve. There are concerns Trump is interfering with the central banks independence. But who appointed Jerome Powell as chairman of Americas central bank in the first place? Well that would be none other then the US president himself.
Some experts say Trumps criticism of Powell is a tactic aimed at diverting attention away from himself over the the state of the economy and its possible decline in 2019. Despite the pressure, the Fed has not backed down. It has raised interest rates four times this year. This is actually done by the central banks monetary policy arm.
A committee consisting of 12 voting members that meet eight times a year. Jerome Powell also sits on the board. The committee has the final say on increasing interest rates. The Fed is tasked with controlling inflation and helping to keep unemployment low. It has argued that unemployment rates have drastically dropped and inflation is currently low. That means people can spend more.
Essentially the fed can affect every Americans spending power. But Wall Street has seen its worst December since the 2008 financial crisis. US markets are worried and have been highly volatile. They fear trouble ahead. Some positive impacts of the tax cuts passed in late 2017 are expected to fade away. Trumps trade war with China is far from over. The government shutdown has not helped either. The markets fear that higher interest rates will soon start to bite.