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They are unprecedented attacks on the central bank of a western industrial state: US President Donald Trump criticizes Fed boss Jerome Powell because, in Trump’s view, he would have to lower the key interest rates. Powell is a “loose” (loser) and “Mr. Too Late” (Lord too late), wrote the president. As reported, he had philosophized last week to fire Powell. In interest rates, this drives in sight, especially with a reference to the fact that Trump’s customs policy increases the risk of inflation for the United States. The next meeting is on May 7th.
- Read too: Austria’s National Bank boss on Trump attacks: “Troubling”
“Trump’s attacks against the central bank are dangerous. He undermines the independence of monetary policy, which is of central importance for a reliable stable currency,” says Gabriel Felbermayr, head of the WIFO economic research institute in Vienna. The discussions about the central bank are “a new source of uncertainty,” says Monika Rosen, stock exchange expert and vice president of the Austrian-American society. The prices of the market.
Search for a safe harbor
The US exchanges came under great pressure on Easter Monday (but won again on Tuesday in early trade), the gold price increased on Tuesday, and even on the record high of $ 3500 per troy ounce for a short time. The euro rose to almost $ 1.15.
The increasing risk aversion of investors leads to “thinking about what is now a safe harbor,” says Rosen: “The dollar and US investments are no longer to the extent that has been known so far. The market is increasingly relying on gold, but interestingly also on Bitcoin.”
According to Felbermayr, the attacks on the central bank weaken the trust of the markets in dollar-denominated systems. “Therefore, US bond courses, share prices and the dollar exchange rate-a rarely observed simultaneity. Because the United States is responsible for more than half of the global market capitalization, an escape from the dollar can have systemic effects,” says Felbermayr.
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Source: Nachrichten
