The Federal Reserve on Wednesday raised its benchmark interest rate by 0.25 percent in keeping with expectations, despite President Trump’s repeated insistence that doing so would threaten the bull market he’s enjoyed since taking office.
The Fed has now raised rates by 25 basis points four times this year in an effort to tighten U.S. monetary policy in a reversal of the of historically low interest rates it has maintained since the financial collapse of 2007.
The central bank also announced plans to raise rates twice in 2019 — reducing their original projection of three rate increases over the course of the year, due to a number of structural forces, including softening housing and automotive markets, stagnating rates of investment, and choppy equities markets.
Trump increased his pressure on the central bank in the days leading up to the rate-hike announcement, accusing its officials of jeopardizing a U.S. economy that is currently outperforming those of its fellow mature, free-market democracies.
It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!
— Donald J. Trump (@realDonaldTrump) December 17, 2018
Powell, a Trump appointee, has been forced to confront the unusual challenge of implementing monetary policy in response to longterm economic forces without appearing cowed by Trump’s insistence that he not raise rates lest he harm the market in the short term.
While most U.S. economic indicators — including historically low unemployment and growth of near 3 percent on the year — indicate strength, the stock market suffered its worst December in 80 years as the stimulus from last year’s tax cuts began to cool and major economies the world over began to show signs of stagnation.