Business

Trump: Fed hurt growth, stock gains by 30%

WASHINGTON: US President Donald Trump said on Sunday that actions by the Federal Reserve have nicked US economic growth and stock market gains by perhaps 30 per cent, and that it should begin pumping money into the economy as it did during the 2007-2009 recession.

Mr Trump's latest broadside against the central bank, delivered by Twitter and without citing any evidence, came as European Central Bank head Mario Draghi and other international officials worry that a Fed politicised by potential Trump nominees would rattle a dollar-based global system.

"If the Fed had done its job properly, which it has not, the stock market would have been up 5,000 to 10,000 additional points, and gross domestic product would have been well over 4 per cent instead of 3 per cent... with almost no inflation.

"Quantitative tightening was a killer, should have done the exact opposite," Mr Trump said, referring to the Fed's monthly withdrawal last year of up to US$50 billion (S$68 billion) of the bonds it had acquired during the worst economic downturn since the Great Depression.

His suggestion that the Fed return to quantitative easing would put it in the position of adding monetary stimulus and expanding its presence in debt markets in an economy growing solidly and with historically low unemployment.

No one at the Fed, including three Trump appointees on the board of governors and his handpicked chairman Jerome Powell, has suggested the US needs the sort of central bank help launched when the economy was in free fall a decade ago.

The Fed has already decided to halt the drawdown of its security holdings as of September after concluding the size of its asset holdings, likely around US$3.5 trillion, would be adequate given the demand by commercial banks to hold central bank reserves, the public demand for cash, and the other uses to which its assets are put. - REUTERS

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