Stepping up his attacks on the Federal Reserve, President Donald Trump declared Tuesday that the Fed is "my biggest threat" because he thinks it's raising interest rates too quickly. There was some worry when rates were at record lows that the Fed couldn't lower them any more to try to stimulate the economy. This usually may lead to an intervention by the Fed to lower rates. Inflation is finally picking up to the level central bankers consider healthy for the economy.
"I think the Fed has gone insane", he said. "What we need to do is to get ourselves well-positioned so whatever may come we can adjust to that".
It was a rare economic analysis from Quarles, the Fed's Vice Chair for Supervision. If and when that happens, my sense is that the president will be thankful for the Fed. Rates are still at historical lows but investors have been spooked by tariffs, more debt issuance by the Treasury, and inflation concerns.
WTI crude touched its lowest price in a month after USA stockpiles rose by 6.5 million barrels, nearly triple what analysts had forecast.
Last week, Trump the Fed for the massive stock sell-off that caused the Dow to plummet 832 points in a single day - its largest single-day point drop since February and its fourth-worst point loss in history.
Some investors say that, after years of easy money, pockets of risk have built up throughout the global economy as borrowing costs begin to increase - raising the chances that a bubble could burst or banks could see significant defaults on debt.
The more the so-called long-term growth potential of the economy increases, "the more gradual we can be in our removal of monetary policy accommodation", he said in the speech. Unemployment is near a 49-year low.
The minutes of the Federal Reserve meeting on September 25-26 suggested that FOMC board members were of the view that more interest rate increases were on the cards.
As opposed to a mild brake on the economy, Bullard argued that rates that high "would be moving quite a ways into restrictive territory".
The rand was largely unchanged on Thursday afternoon as the dollar continued to consolidate around $1.15 to the euro ahead of expected further interest-rate hikes in the US.
Asked if he thinks the current path of rate hikes is threatening economic growth, Quarles said it depends on one's expectations about the US economic trajectory.
In remarks Thursday to the Economic Club of NY, he suggested that a tick up in the economy's potential growth rate, if realized, could warrant a slower pace of rate hikes than would otherwise be appropriate.
"If there are emergencies that affect the exchange rate, the Treasury has this bank account to the New York Fed that they're allowed to use to send trade orders through the Fed", Richardson explained.