Trump voices confidence in Mnuchin

United States Treasury Secretary Steven Mnuchin (right) and US Federal Reserve chairman Jerome Powell.
United States Treasury Secretary Steven Mnuchin (right) and US Federal Reserve chairman Jerome Powell.PHOTO: BLOOMBERG

US leader publicly backs Treasury Secretary and Fed chief as US stock futures rebound

WASHINGTON • United States President Donald Trump expressed confidence in the Treasury Secretary, Federal Reserve and US economy on Tuesday, moving to calm financial markets further roiled after Bloomberg News reported that the President had discussed firing the central bank's chairman over raising interest rates.

Mr Trump, asked if he has confidence in Treasury Secretary Steven Mnuchin, said: "Yes I do, very talented guy, very smart person."

Asked about Fed chairman Jerome Powell, Mr Trump said the central bank is "raising interest rates too fast" but he has "confidence" that the Fed will "get it pretty soon".

The dollar rose and US equity futures advanced yesterday after a volatile start as investors assessed the comments. Futures on the S&P 500 Index jumped 0.7 per cent as of 7.26am New York time, the first advance in two weeks and the largest climb in more than three weeks.

The President - answering reporters' questions at the White House after addressing US armed forces members on a Christmas Day video conference call - said the Fed was hiking borrowing costs because the "economy is doing so well", adding that US companies were having "record kinds of numbers" and it is a "tremendous opportunity to buy".

The remarks represent Mr Trump's first expression of public support for Mr Mnuchin and Mr Powell since people familiar with the matter told Bloomberg News last week that the President had discussed dismissing the Fed chief, who was recommended by Mr Mnuchin.

Before Tuesday's comments, one person familiar with the President's thinking said Mr Trump had also weighed dismissing Mr Mnuchin, while another said Mr Mnuchin's tenure may depend in part on how much markets continue to drop.

Mr Trump's frustration with Mr Mnuchin is rising after his attempts to calm Wall Street failed, CNN reported, citing a source close to the White House, who said the Treasury Secretary could be in "serious jeopardy" with the President.

The S&P 500 stock index tumbled 2.7 per cent on Monday in its worst trading session before the Christmas holiday. Further declines in stock futures yesterday in Asia suggested that the benchmark for American equities was nearing a bear market until it turned around, as US markets were poised to open.

As stocks rose for most of Mr Trump's first two years in office, the President frequently pointed to the gains as a sign of his success. Since they began falling, he has often blamed the Fed, even though investors are becoming increasingly concerned about the impact of the administration's trade battles with China and Europe.

Mr Trump's Oval Office remarks contrasted with his tweet on Monday, saying: "The only problem our economy has is the Fed. They don't have a feel for the Market, they don't understand necessary Trade Wars or Strong Dollars or even Democrat Shutdowns over Borders."

One reason stocks have been declining is the partial US government shutdown over Mr Trump's demand for billions of dollars for a wall on the Mexican border - his top campaign promise.

On that issue, Mr Trump gave little ground on Tuesday, saying that the agencies will not reopen "until we have a wall, a fence, whatever they'd like to call it".

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A version of this article appeared in the print edition of The Straits Times on December 27, 2018, with the headline 'Trump voices confidence in Mnuchin'. Print Edition | Subscribe