WASHINGTON — Oct 12, 2018, 11:47 AM ET

Mnuchin says Trump respects the independence of the Fed

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Treasury Secretary Steven Mnuchin said Friday that President Donald Trump respects the independence of the Federal Reserve and the president's recent comments were simply a reflection of the fact that he favors low interest rates.

"The president has been clear," Mnuchin said in an interview with CNBC. "He likes low interest rates."

Mnuchin, who praised Fed Chairman Jerome Powell, said the president understands that the Fed is doing its job.

Trump this week has blamed the market's big sell-off on the Fed's interest rate increases, saying "the Fed is out of control." But Mnuchin disputed that Trump's comments represented an attack on the Fed.

"He doesn't feel the need to attack at all," Mnuchin said. "The president is concerned about the Fed raising interest rates too much and slowing down the economy. And those are obviously natural concerns."

Mnuchin said he viewed the market turbulence as a "natural correction after the markets were up a lot" rather than a sharp plunge triggered by bad news on the economy.

"I think the fundamentals are still very strong," Mnuchin said. "Markets tend to go too far in both directions and they have natural corrections."

Mnuchin was interviewed in Bali, Indonesia, where he is attending global finance meetings including the annual meetings of the International Monetary Fund and the World Bank along with Powell, who is representing the Fed at the meetings.

Mnuchin met on Thursday with Yi Gang, head of China's central bank.

"We had a constructive discussion around currency," Mnuchin said. "I expressed my concerns about the weakness of the currency."

Mnuchin said in the discussions he had with the Chinese they had made clear that they did not see a further weakening of the Chinese yuan as being in their interests.

The Chinese currency has been falling in value against the dollar in recent months, raising concerns that China is devaluing its currency as a way to make Chinese goods more competitive against U.S. products.

The United States and China are currently locked in an escalating trade war with the Trump administration imposing penalty tariffs on billions of dollars in Chinese goods and China retaliating by targeting U.S. products including soybeans for penalty tariffs.

Mnuchin did not report any breakthroughs in his discussions with the Chinese but he indicated that Trump may meet with Chinese President Xi Jinping during a summit of leaders of the Group of 20 biggest global economies in Argentina in late November.

"We're having discussions about a potential meeting," Mnuchin said, indicating that the two leaders could meet if the U.S. side felt the trade discussions were moving in a positive direction.

The Treasury Department is expected to issue next week its twice-a-year report on whether China or any other country is manipulating its currency to gain trade advantages.

Mnuchin would not say what the report would reveal, but in the past Treasury has placed China on a watch-list but said it did not meet the requirements to be labeled a currency manipulator.

Concerns have been raised that China, the largest foreign holder of U.S. Treasury bonds, might start dumping its holdings as a way to bring more pressure on the United States in the trade dispute. But Mnuchin said this possibility did not concern him because it would not be in China's economic interests to start dumping its Treasury holdings.

"That would be very costly for them to do," Mnuchin said. "It's not something I'm at all losing any sleep about."

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  • Ctrygrl

    This is definitely happy H-S from Mnuchin, there is nothing this president does not want to control, or think he has the right to control

  • snake

    The worst is yet to come. Trump has arrested development and functions as a 10 year old. He will destroy the Feds independence and force them to keep rates too low which will cause hyper inflation and eventually the Fed will be forced to raise rates to the nose bleed level to contain it as they did in the 1980s. It's wise to be in cash right now with some gold ownership. As this plays out you'll be able to buy 10 year Treasuries yielding 8 - 10%.

  • Ronny Demeyere

    From his whole story there is only one thing that says something, Trump wants to have a conversation with Chinese President Xi Jinping. A few weeks ago it was trade taxes and another trade tax. Today he sees that his bullying as with Canada and the cancellation of TPP and even more melagomanic decisions go the wrong way again. He will now try to glue his broken pots in Argentina. His arrogant lie that the Chinese steal will also have to be swallowed. It is the American billionaires for to be fast super wealthy who have sold the technology by placing their factories in the cheap china and the Chinese who are not stupid have mastered this tecnology.

  • Forward forward

    Not one word coming from this administration is ever intentionally true. Sometimes it is true, but only if they can't think up a good lie.

  • Weazerdogg

    Trumph doesn't respect anything you moron.

  • P'Thizikil

    Calling the Fed "crazy" is the definition of disrespect for their independence. He is basically telling his own appointee, who is just doing his proper job, that he should be doing Trump's bidding instead. The economy doesn't matter so long as Trump is popular for a moment. Interest increases and polio shots are a lot less bad than their absence.

  • Ptah

    Munchkin will deny that the Sun rises in the East if it makes Trump look bad. Just ignore his blathering. It's as meaningless as one of Trump's promises.

  • Nearl56 12

    Trump respects something other than himself.

    Get outta here.

  • Alexthekay

    Remember Trump, back in 2016, claiming that interest rates were being held down "artificially" and "for political reasons?"

  • hound

    "Trump this week has blamed the market's big sell-off on the Fed's
    interest rate increases, saying "the Fed is out of control." But Mnuchin
    disputed that Trump's comments represented an attack on the Fed."

    "out of control" is an attack on anyone or anything; even Trump.

    If the FED is "out of control," why has the market moved upwards today; the FED has not changed anything?

  • Erwin Schrodinger

    Trump respects no one's independence from his dictates. The word megalomaniac comes to mind.

  • James Coletrane

    constantly having to cover up Trump's lies has to grow old on his minions

  • mollydtt

    “Trump respects independence”—-He hasn’t so far. His words so far contradict Mnuchin’s.

  • mshna

    To Fed Chairman Powell: I understand your sense to assert your independence. It may also be wise to pause and think about the amazing GDP growth. Who thought that we could even approach 4% in 2016? and so fast? You raised the rate 4 times now, in a financial system which adapted to 0 rate for 10 years. It may take a little more time for the system to adapt. For the first time Potus only raised a question twice before your last move. Just seems to me a tiny touch of humility not to make such an assertion in black October would not hurt your long term mission.

    Back to the amazing GDP call. I spoke to many small businessmen about it. They were all surprised especially at the speed. Without using econ speak, it was characterized as a feeling for how things can move. They can see that. In the same way, there can also be a feeling for the interest rates. No one doubts your independence, just suggest you touch the ground on which we all stand. ..

  • carcar

    He "respects" it.............for now. Just wait until it really truly corrects.

  • spas2k

    Fake news. Trump doesn't respect anything what so ever.

  • RG

    Notice how often Trump's minions have to come forth and tell us what he really meant?

    And it is nearly always very different from what he actually said and did?

    This tactic is one of the defining features of this presidency. Trump can say anything, however alarming or offensive, and his people will look you right in the eye and lie.

    They will tell you he really meant the opposite. "No, Trump wasn't trying to pressure the independent Fed to do what he wants. Of course not." Sure.

  • Chuckie M

    Seriously, has Munchkin seen the D-mans tweets. Who you going to believe me are your lying eyes and ears. Go away please you scumbag.

  • kittenpops

    I saw the words ‘trump respects’ and I stopped because I knew it was a lie.

  • Orange McCarthy Slush

    So calling the feds crazy, and working against him, publicly is giving them their independent space to operate? Just wow.