Mario Draghi expressed doubts in the Fed’s independence.

European Central Bank President Mario Draghi hosted a press conference in the International Monetary Fund headquarters last Saturday, and his speech was unprecedented. The main surprise was that Draghi blamed US President Donald Trump that he’s trying to influence the monetary policy decisions made by the Federal Reserve, the largest central bank in the world. Trump made several efforts earlier, targeting Fed’s Chair Jerome Powell to enlarge the level of supportive measures and stimulus for the US economy. The main requirement was to cut interest rates and soften the financial conditions. Although Powel managed to withstand the political pressure and did not cut the interest rates, the US Federal Reserve stopped the tightening cycle and decided to take a cautious and patient position of the interest rates.

One of the reasons why Draghi was unpleased with such decision was that the US dollar started to slide versus the single European currency as the interest rates differentials stopped growing. It’s interesting to listen to comments about central banks’ independence from Mario Draghi, who’s a well-known dove. ECB President traditionally supports German and French exporters by lowering the exchange rate of euro and imposing additional supportive measures with too ample liquidity in the financial system. See,s like currency wars continue weighing on international trade and global monetary policy.
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