World

Trump calls on Fed to cut interest rates

By AAP Newswire

Donald Trump has called on the Federal Reserve to cut interest rates by at least a full percentage point "over a fairly short period of time", saying it would make the US economy even better and would "greatly and quickly" enhance the global economy.

In two tweets, the US president kept up his pressure on the Fed and its chairman, saying the US economy was strong "despite the horrendous lack of vision by Jay Powell and the Fed".

Powell is Trump's hand-picked choice for the top Fed job.

He said Democrats were trying to "will" the economy to deteriorate ahead of the 2020 election.

The Trump administration in recent days has sought to calm worries about a potential US recession, heightened by last week's steep stock market decline.

The Fed on July 31 cut its key policy rate for the first time in more than a decade, reducing it by a quarter-point to a range of 2 per cent to 2.25 per cent.

It cited a number of "uncertainties" threatening the country's decade-long expansion, from Mr Trump's trade battles to slowing global growth.

Economists and investors will be closely watching a speech Powell will give on Friday at the Fed's annual conference for signals of whether the central bank is prepared to embark on a series of rate cuts to energise the economy.

Over the past year, Trump has kept up a steady drumbeat of attacks on Powell.

In addition to calling for the Fed to cut rates by a full percentage point, he also said the central bank should consider supplying quantitative easing as well, the term economists use to describe the Fed's efforts to restart economic growth over the 2007-09 recession by buying bonds to lower long-term interest rates.

The Fed did announce in July that it would halt its program to shrink its bond holdings this month, two months earlier than planned, but officials have given no indication they are considering another round of bond purchases to increase the size of their balance sheet.