Trump calls on Fed to slash rates and weaken dollar despite currency truce with China

Trump calls on Fed to slash rates and weaken dollar despite currency truce with China
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President TrumpDonald John TrumpSanders says he wouldn't 'drop dead' if Trump decided on universal healthcare Overnight Health Care: Trump officials lay groundwork for May reopening | Democrats ramp up talks with Mnuchin on next relief deal | Fauci says death toll could be around 60,000 Hillicon Valley: State officials push for more election funds | Coronavirus surveillance concerns ramp up pressure for privacy bill | Senators warned not to use Zoom | Agencies ask FCC to revoke China Telecom's license MORE on Tuesday called on the Federal Reserve to slash interest rates to give the U.S. a boost in global trade despite agreeing to a truce with China on currency and exchange rates in a preliminary trade agreement set to take effect in March. 

In a Tuesday tweet, Trump repeated his longstanding demand for the Fed to cut borrowing costs to juice the economy and weaken the value of the U.S. dollar. A weaker dollar would make U.S. goods relatively less expensive in foreign markets, where American products are often more expensive than goods from countries with lower interest rates.

“The Fed should get smart & lower the Rate to make our interest competitive with other Countries which pay much lower even though we are, by far, the high standard,” Trump tweeted.

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Trump’s tweet comes as the Fed’s rate-setting Federal Open Markets Committee begins its first policy meeting of 2020. The Fed is almost certain to announce Wednesday it will keep interest rates steady as the U.S. economy remains strong.

Trump has spent most of his presidency seeking to bend the independent central bank to his whims and enlist it in his trade war with China. The president has long accused the Fed and its chairman, Jerome Powell, of choking U.S. prosperity by refusing to pump crisis-level stimulus into a growing economy with unemployment at 50-year lows. 

While Trump’s Tuesday tweet is the latest in a long line of Fed missives, it is the first since the president signed a “Phase One” trade deal with China on Jan. 15 that included a promise not to target foreign exchange rates for competitive purposes.

The text of the agreement, which takes effect 60 days after its Jan. 15 signing, says the U.S. “shall refrain from competitive devaluations and not target exchange rates for competitive purposes, including through large-scale, persistent, one-sided intervention in exchange markets.”