Powell, Trump and a negative interest rate tug of war

After a brief reprieve Trump is turning up the heat on Powell again

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President Trump, who has eased up pressure on Federal Reserve Chair Jerome Powell after a series of rate cuts to combat the coronavirus, may be ready to turn up the heat once again.

"As long as other countries are receiving the benefits of Negative Rates, the USA should also accept the "GIFT" Big numbers!" Trump tweeted on Tuesday.

The tweet comes ahead of Powell's speech Wednesday on the state of the U.S. economy that he'll deliver virtually for the Peterson Institute for International Economics starting at 9 a.m. ET.

In March, policymakers sprung into action with a series of emergency steps to boost lending and liquidity, including cutting rates to near zero as the coronavirus hit the U.S. and businesses nationwide were forced to close.

At the time, Powell stressed, "We do not see negative policy rates as likely to be an appropriate policy response here in the United States."

FED'S POWELL SEES WEAK SECOND-QUARTER GROWTH, WON'T USE NEGATIVE INTEREST RATES

Last month, Powell reiterated that commitment.

"We have lowered interest rates to near zero in order to bring down borrowing costs. We have also committed to keeping rates at this low level until we are confident that the economy has weathered the storm and is on track to achieve our maximum-employment and price-stability goals" he said.

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On Tuesday, Cleveland Fed President Loretta Mester echoed Powell's view in a speech.

Still, more than 33 million Americans have lost their jobs with the unemployment rate spiking from a record low to 14.7 percent through April. Other economic data points, such as retail sales registered the worst drop in history last month.

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Following the Fed's emergency efforts, Trump praised Powell after many months of harsh criticism on Twitter and via public comments.

"I really think he's caught up and he's done the right thing," said Trump during a March press briefing. "Ultimately, we will be rewarded because of the decision he made...he's really stepped up over the last week" he added.

The Fed's next meeting will take place on June 9-10 and currently, the CME's Fed Watch tool is forecasting a 99 percent probability that rates remain unchanged.

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