Further US rate hikes 'most likely' needed: Fed minutes

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Beijing's lack of transparency and the recent weakness of the yuan continued to pose major challenges to achieving "more balanced trade", Treasury Secretary Steven Mnuchin said in a twice-yearly report on the foreign exchange policies of major United States trading partners.

USA central bankers see no reason to pause the current course of gradual rate hikes that have infuriated President Donald Trump and some even say the Federal Reserve may soon need to slow the economy, according to meeting minutes released Wednesday.

In remarks to the Economic Club of Memphis, Bullard pointed to a possible next chapter in the central bank's discussion: What to do if, as expected, the growth rush from recent tax cuts, increased government spending and other positive economic trends begins to fade.

China's policies were still of "particular concern" the Treasury said.

In recent years, however, the yuan or renminbi (RMB) has strengthened and economists now say it is more in line with China's economic fundamentals.

Interest rate increases ripple through the economy, making loans more expensive for businesses and consumers and thereby slowing investment and spending. Since mid-June, the renminbi has fallen more than 7 percent against the USA dollar. NONE of its major trading partners meet its criteria to be designated as currency manipulators, . but that Washington included South Korea among the nations on its watch list.

During the World Bank-International Monetary Fund's annual meetings last week, Mnuchin said he had held constructive talks with PBOC Governor Yi Gang.

A growing US economy and falling unemployment have also whipped up demand among US consumers for imported goods, with 2017's record US-China trade deficit continuing to widen this year - swelling 3.2 per cent to us$390 billion in the 12 months ending in June.

President Trump argues the growth in Chinese exports to the USA has destroyed American jobs. The Treasury did note that direct intervention into the currency's valuation this year appeared limited.

The United States has imposed tariffs on about $250 billion in Chinese goods, and Beijing has responded by targeting about $110 billion in US products. "In that context, whether or not China is labeled a currency manipulator does not seem particularly important".

"It is in China's interest to implement measures that would reduce the bilateral trade imbalance", the report warned.

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