Trump escalates his attack on Fed: 'My biggest threat'

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The Federal Reserve's minutes from its meeting in late September, when it raised interest rates for the third time this year showed some participants thought the Fed's key interest rate would eventually need to "become modestly restrictive" to ensure inflation doesn't climb too high.

Trump has recently been vocal in his displeasure with the pace of the Fed's interest rate hikes.

Yellen spoke at a banking forum just days after the president repeatedly complained that the Fed was hurting financial markets and threatening economic growth by raising interest rates too quickly.

Over the past few decades, presidents have typically refrained from commenting on the Fed's interest rate policy, since the central bank is independent and presidential pressure on the Fed typically ends in disaster.

"My biggest threat is the Fed, because the Fed is raising rates too fast", Trump told Fox Business host Trish Reagan.

Janet Yellen cautioned that Donald Trump's criticism of Federal Reserve policy threatens the institution she ran for four years, adding that it's "not a desirable thing for a president to comment so explicitly on Fed policy". "I'm not blaming anybody", he said in the interview.

Financials offered some stability with Goldman Sachs up nearly 3 per cent, and JP Morgan Chase also rallying on the back of US Federal Reserve minutes showing the decision to raise rates last week was unanimous. "I put him there and maybe it's right maybe it's wrong, but I put him there", Trump said.

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The U.S. central bank has settled into a gradual policy of raising its policy interest rate that began slowly in late 2015, and is expected to raise rates again in December and next year.

"There are a lot of other people there I'm not so happy with", he said. "The Fed is going loco and there's no reason for them to do it and I'm not happy about it".

Fed officials also noted that US trade policies remained a "source of uncertainty" for the outlook for USA growth and inflation, citing USA tariffs on aluminum and steel as reducing new investment in the energy sector.

The market has priced in another hike in December, with three more increases expected in 2019, which would take rates in the United States to a level slightly above neutral.

But "I don't think the fact that he has publicly criticized the Fed, in any way shape or form, is going to impinge upon (its) independence", he told Reuters.

Quarles still addressed the current regulatory framework, saying the Fed does not see enough concern in financial stability to turn on an extra supervisory tool on the largest banks called a "countercyclical capital buffer", which would force the large financial institutions to retain more capital.

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