(Observer Network News)
The United States' GDP data in the first quarter of this year reached 3.2%, the highest since the third quarter of 2018.
However, the "surprisingly low" inflation rate still makes Trump unsatisfied.
On Tuesday, he shouted to the Fed on Twitter : "Not only should we restart quantitative easing (QE) to buy bonds, we should also lower interest rates by 1%, so that the US economy will long ago 'like a rocket'."
's requirement is equivalent to bringing the Fed back to the interest rate level at the end of 2017. The latter's four interest rate hikes in 2018 made Trump extremely dissatisfied.
Currently, Federal Reserve Chairman Powell is attending a two-day monetary policy meeting. The minutes of the March meeting and the outside world's previous forecasts will not raise interest rates this year. However, Nomura Securities analysts believe that out of concerns about the shortage of funds in the banking system, Powell may restart quantitative easing as early as this week and cut interest rates by 50 basis points.
Trump Twitter
Trump: Not only do we need QE, we also need to cut interest rates by 100 basis points
On the afternoon of Tuesday (30th) local time, Trump called on the Fed on Twitter, demanding the restart of quantitative easing (QE) and cut interest rates by 100 basis points.
"If we lowered interest rates, say 100 basis points, and then some quantitative easing policies, the US economy would have been on the Rockets long ago. A 3.2% GDP is of course good, but based on the low surprising inflation rate, we (economic data) could have set an important record while starting to reduce national debt!"
Trump criticized the Fed for "continuously raising interest rates when inflation is extremely low" and implemented "a large number of quantitative tightening (QT)".
When the U.S. non-farm employment data for March was released earlier this month, Trump also expressed a similar view and asked the Federal Reserve to cut interest rates by 50 basis points. If Trump said this time, a 1% reduction will mean returning to the interest rate level at the end of 2017.
On April 26, data released by the U.S. Department of Commerce showed that the initial annualized growth of the U.S. real GDP in the first quarter was 3.2%, the highest level since the third quarter of 2018. It was not only higher than the market expectations of 2.3%, but also rebounded sharply from the previous value of 2.2%.
Chudlow, director of the White House National Economic Commission, immediately said that this is an "explosive data" and that the US economy is currently in a boom cycle and is gaining, not losing momentum. He agrees with Trump's view that inflation is still falling, saying: "Even the Fed's own spokesperson, from the Fed Chairman to the people below, may have to open the door to rate cuts."
Inflation continues to be lower than expected, and the Fed does not expect to raise interest rates this year
Although Trump frequently urges, the Fed has not yet shown the intention of concession on interest rates.
On Monday (29th), the U.S. Department of Commerce's inflation indicators showed that the U.S. personal consumption expenditure (PCE) price index in February and March this year increased by 1.7% and 1.6% year-on-year, neither of which reached the Federal Reserve's 2% target. The March data hit the slowest growth rate in 14 months, indicating weak U.S. inflation.
Since 2012, the US core PCE price inflation has exceeded the Fed's 2% target in just 5 months. Data: US Department of Commerce
Minutes of the Federal Reserve's March monetary policy meeting show that most officials believe that considering changes in economic outlook and risks, the target range of the federal funds rate may remain unchanged this year.
The Federal Reserve raised interest rates four times last year, which aroused Trump's dissatisfaction and criticism. But Powell repeatedly insisted that Trump's criticism had no effect on the Fed's decision.
IHS Markit chief economist Nariman Behravesh commented that Trump's Twitter "is equivalent to giving demand a shot of heart-warming agent, which can bring growth in the short term", but it will not help long-term growth rates, and "it will almost certainly push up inflation."
However, Charlie McElligott, an analyst at the Nomura regime, pointed out in a report Tuesday that even big banks acknowledge that there is a shortage of funds in the U.S. banking system and believe that the Fed will cut interest rates by 50 basis points, which may be earlier than most people's expectations.
He gave three reasons: cyclical "insurance"; "re-inflation"; the recent dynamics of US dollar financing reflect that before the balance sheet expanded again in the fourth quarter of 2019, the reserves of the banking system continued to shrink.
Congress: US infrastructure requires $2 trillion
On Tuesday local time, Democratic leader of the U.S. Congress, Shuck Schumer, said that senior Democratic Party leaders have reached a consensus with Trump on a $2 trillion infrastructure plan and will discuss the idea of infrastructure financing this month.
"We agreed to a very, very good number," Schumer said.
Trump announced a plan in February 2017 to encourage state, local and private investors to invest in improving the environment. Trump had asked Congress to approve $200 billion in grants over the next 10 years to stimulate the $1.5 trillion program in the plan, but failed to pass Congress.
This infrastructure plan was first proposed by Democrats in 2017
Democratic House Leader Pelosi (Nancy Pelosi) once said that according to experts' estimates, the U.S. demand for infrastructure is between 4 trillion and 5 trillion US dollars. She said some water supply systems are 100 years old and it is crucial to build broadband networks “all over the United States”.
Trump made the above remarks at 2 pm on Tuesday, and pushed the Dow Jones Industrial Average to expand its gains. S&P 500 market also turned from a flat position.
However, the US dollar index narrowed its decline after the remarks were released, and then the decline expanded to 0.4%, falling below 97.50. The yield on the 10-year US bond further fell and could not return to above 2.51%.
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