Donald Trump called on the Federal Reserve on Friday to cut interest rates after a stronger-than-expected August jobs report, threatening to stop trading with some countries if the central bank did not. US employers added 162,000 jobs last month, well above forecasts. The figures prompted traders to increase bets that the Fed would instead raise rates later this month.
What did the president say? Trump, who has repeatedly demanded that the Fed cut rates, said in a social media post: "We should have the LOWEST RATE of any country in the World ... LOWER THE RATE OR I'LL STOP TRADING WITH COUNTRIES WITH WHICH WE HAVE A DEFICIT," the Korea Times reported. He also said high interest rates put the US "at a very unfair disadvantage" and that he would not allow that to happen. The president, whose post was quoted by the BBC, said the Fed Board "with its great new leader" must "get smart - BE PATRIOTS for a change". He called it "crazy" that US stock indexes traded down on Friday as the jobs data raised expectations of a hike, saying the market "should go UP".
What drove the hiring? Hiring in restaurants and bars, and in local government education ahead of the new school year, was behind August's rebound, the BBC reported. Weaker figures from earlier in the summer were also revised up: instead of shedding 23,000 jobs in July, the economy was found to have created some 44,000. The unemployment rate held at 4.1%, with seven million people out of work, while average hourly earnings rose 3.1% to $37.75.
What happens next? The Fed's next rate decision is due on 15-16 September, after rates were left unchanged between 3.5% and 3.75% in July for the fifth time in a row, the BBC reported. Inflation remains above the Fed's 2% target, with prices up 3.4% over the past 12 months, and last week Fed chairman Kevin Warsh signalled that rates could be hiked if policymakers were not confident price rises were easing. Stephen Brown, chief North America economist at Capital Economics, said the strength of the jobs market meant next week's inflation figures would only need to be moderately above target to fuel expectations of a September hike. Almost 60% of traders were betting on such a move, CME Group's FedWatch data showed.
Figures referenced: Donald Trump. — JudgeMarket.
