25 February to 3 March: The POTUS lashed out at the Fed, again

The President of the US was very vocal this weekend about his dissatisfaction with how the Fed conducts monetary policy. The POTUS lashed out at Jerome Powell, as he referenced the Fed Chair as a person who “likes raising interest rates,” “loves quantitative tightening” and “likes a very strong dollar.” Obviously, President Trump is not in love with any of the above. Although the President has the right to give voice to his opinion on the conduct of monetary policy, his remarks have little to no impact on the actual decision-making progress of the FOMC due to the strong institutional framework. So, does it really matter what President Trump says? To be honest, not really. The President’s claims can temporarily influence market sentiment and asset prices, but as long as no policy (re)action follows his jawboning, the landscape does not change fundamentally. Therefore, the Fed continue business as usual and decide on the appropriate course of monetary policy as before, i.e. based on the trinity of macroeconomic data, financial conditions and asset price developments.

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