It was bound to happen sooner or later: having flipflopped on virtually everything else, moments ago, in an interview with the WSJ, Trump also backtracked on his strong-dollar policy and in an interview with the WSJ, has said that the "US dollar is getting too strong", that the "strong dollar will ultimately hurt the US', and as a result, he preferes a low interest rate policy.
The headlines from Dow Jones:
- TRUMP SAYS IN WSJ INTERVIEW STRONG DOLLAR 'WILL HURT ULTIMATELY' THE U.S., MAKES IT VERY HARD TO COMPETE
- PRESIDENT TRUMP: U.S. DOLLAR 'IS GETTING TOO STRONG'
- TRUMP SAYS HE PREFERS LOW INTEREST RATE POLICY
- TRUMP SAYS WON’T LABEL CHINA CURRENCY MANIPULATOR: WSJ
And the details from the WSJ:
President Donald Trump said Wednesday the U.S. dollar “is getting too strong” and he would prefer the Federal Reserve keep interest rates low. Mr. Trump, in an interview with The Wall Street Journal, also said his administration won’t label China a currency manipulator in a report due this week.
He left open the possibility of renominating Federal Reserve Chairwoman Janet Yellen once her tenure is up next year, a shift from his position during the campaign that he would “most likely” not appoint her to another term.
“I do like a low-interest rate policy, I must be honest with you,” Mr. Trump said at the White House, when asked about Ms. Yellen. “I think our dollar is getting too strong, and partially that’s my fault because people have confidence in me. But that’s hurting—that will hurt ultimately,” he added. “Look, there’s some very good things about a strong dollar, but usually speaking the best thing about it is that it sounds good.”
He continued, “It’s very, very hard to compete when you have a strong dollar and other countries are devaluing their currency.”
Mr. Trump said the reason he has changed his mind on one of his signature campaign promises is that China hasn’t been manipulating its currency for months and because taking the step now could jeopardize his talks with Beijing on confronting the threat of North Korea.
“They’re not currency manipulators,” Mr. Trump said.
Well, they are, they are just manipulating it in the opposite direction at this very moment.
Ms. Yellen was a frequent target of Mr. Trump’s during the campaign, when he criticized her for keeping interest rates low. Asked if Ms. Yellen was “toast” when her term ends in 2018, Mr. Trump said, “No, not toast.”
“I like her, I respect her,” Mr. Trump said, noting that the two have sat and talked in the Oval Office. “It’s very early.”
So where did this complete policy U-turn and "novel" weak dollar idea come from? Take one guess: "Treasury Secretary Steven Mnuchin, who sat in on part of the interview, said the president was “very close” to nominating a vice chairman to the Federal Reserve Board and another to the seat set aside for a community banker.
“We think that is very important,” Mr. Mnuchin said about the community banker seat."
The result was instant: the dollar just crashed.
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In other words, instead of calling China a currency manipulator, Trump was manipulate the dollar instead. And just like that Trump is now in war with the tightening Fed.