Earlier today the Chairman of the FED publically commented the recent Wall Street demands for reductions in the interest rate, to make the greenback more competitive in the brewing currency war of low global rates.
The top banker argued that the FED remains distant from politics and international relations, claiming that the focus of the central bank is entirely shifted towards implementing accommodative monetary policy to support sustainable growth and stable economic conditions. He said:
"Since the beginning of the year, we had been taking a patient stance toward assessing the need for any policy change. [..] We now state that the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labour market and inflation near its symmetric 2 per cent objective. […] The FED is insulated from short-term political pressures – what is often referred to as our 'independence'." [source]
The apparent distancing of the central bank from the undergoing political struggles on the global stage seemingly discouraged investors who were hoping for the FED to ease up on its stance and make headway towards future reductions of the rate. As a result, major US indexes fell during today's trading session, as investors started to weigh in on the possible longer-term ramifications for the US economy from the dissociation of the FED with Trump's administration.
Powell’s remarks come just a day after Donald Trump claimed responsibility for influencing the recent hike in the US stock market.
Stock Market is heading for one of the best months (June) in the history of our Country. Thank you Mr. President!
— Donald J. Trump (@realDonaldTrump) June 25, 2019
The Dow Jones Industrial fell with 0.67% (as of 11 am CET) and failed to break above the fundamentally important resistance level of 26862, which was last tested on the 13th of October 2018.
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