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FxWirePro: President Trump piles dovish pressure on Fed ahead of key meeting

As the policymakers at the U.S. Federal Reserve are holding a two-day meeting before announcing the crucial rate hike decision on Wednesday, President Trump is piling pressure on the central bank to not to go for a rate hike at the meeting. The Fed had forecasted four rate hikes in 2018 and it has so far followed through its promise by hiking three times already, now the question on everyone’s mind is whether it will follow through its promise or bow to the pressure by President Trump.

On Monday, the president tweeted, “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!” and on Tuesday, as the Fed Presidents meet, Trump turned up the heat further, “I hope the people over at the Fed will read today’s Wall Street Journal Editorial before they make yet another mistake. Also, don’t let the market become any more illiquid than it already is. Stop with the 50 B’s. Feel the market, don’t just go by meaningless numbers. Good luck!”

Some analysts are suggesting that there is a good chance that the Fed might skip tomorrow’s rate hike as inflation has eased somewhat (from 2.9 percent y/y in July to 2.2 percent in November) and oil prices have slumped.

The bond market is currently pricing a 71 percent probability that the Federal Reserve would hike rates. President Trump’s attack on the rate hikes has been pushing the dollar down. The dollar index, which is the value of the dollar against a basket of currencies, is trading at 96.82, down 0.3 percent for the day so far.

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