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Despite Trump criticism, Fed policymakers see need for more rate hikes

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Despite sharp criticism from U.S. President Donald Trump for raising interest rates, Federal Reserve policymakers remain generally united on the need to raise borrowing costs further, according to minutes from their most recent policy meeting.

Every policymaker backed the Fed’s September rate increase, according to the minutes of the Sept. 25-26 meeting, published Wednesday. The display of unanimity could bolster expectations the central bank will raise rates a fourth time this year in December.

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Participants in the FOMC rate-setting committee “generally anticipated that further gradual increases” in short-term borrowing costs would be consistent with the kind of continued economic expansion, labor market strength, and firm inflation that most anticipated, the minutes showed.

“This gradual approach would balance the risk of tightening monetary policy too quickly, which could lead to an abrupt slowing in the economy and inflation moving below the Committee’s objective, against the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances,” the minutes said.

U.S. stock prices recovered some earlier losses but were still down for the day following the minutes. U.S. Treasury yields were little changed. Trump has accused the Fed of endangering the country’s economic health, this week saying the central bank is his “biggest threat” and last week calling the central bank “crazy,” “loco,” “ridiculous,” and “too cute.”

Though the minutes did not refer to any of Trump’s criticism, its message of further rate increases suggests that policymakers are not fazed by it.

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“For now, the Fed has made it clear that they are focused on their agenda despite rising Presidential pressure on their rate decisions,” said Mike Loewengart, vice president of investment strategy at E*Trade.

The minutes did suggest that the committee remains split on how much further to raise rates next year, with a few participants expecting rates would need to rise enough to modestly restrain economic growth, even as two others “indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.”

Compared to the minutes of Fed’s previous meeting held in August, the September minutes appeared to show less discussion around the prospects that a recession might be lurking around the corner. Rather, some of the central bankers appeared to see some indications of a stronger U.S. economy.

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“Almost all participants saw little change in their assessment of the economic outlook, although a few of them judged that recent data pointed to a pace of economic activity that was stronger than they expected earlier in the year,” according to the minutes.

Still, policymakers noted that the relative weakness of the international economy could create “potential for further strengthening of the U.S. dollar,” a factor that could weigh on U.S. exports.

They also noted that some businesses said they were investing less in the energy sector due to the imposition of import tariffs on steel and aluminum, part of an array of trade policy conflicts the Trump administration has pursued.

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The U.S. economy has been growing more quickly this year than many economists believe is possible without generating higher inflation, with the jobless rate at its lowest level in decades.

The Fed has been raising interest rates since 2015 and after the rate hike last month it stopped describing the stance of monetary policy as “accommodative,” meaning that it no longer thought the level of interest rates was stimulating the economy.

The minutes showed that “almost all” policymakers agreed it was time to stop saying they were stimulating the economy.

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Reporting by Jason Lange and Pete Schroeder; writing by Ann Saphir; Editing by Andrea Ricci


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2020 Election

‘I don’t care’: Watch Kamala Harris shut down Chris Hayes for asking a dumb question about Trump

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Sen. Kamala Harris shut down MSNBC anchor Chris Hayes during a post-debate interview on Tuesday evening.

Hayes questioned Harris about her call for Twitter to follow their terms of service and kick President Donald Trump off of the platform.

"Do you think he puts people’s lives in danger when he targets them in tweets?" Hayes asked.

"Absolutely," Harris replied.

"Do you think he knows that?" Hayes asked.

"Does it matter?" Harris replied.

"The fact is he did it. The fact is that he is irresponsible, he is erratic," she explained. "He is like a 2-year-old with a machine gun."

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2020 Election

Democrats blast Trump and demand his impeachment at CNN debate

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Democratic White House hopefuls united in searing condemnation of Donald Trump during their fourth debate Tuesday, saying the president has broken the law, abused his power, and deserves to be impeached.

From the opening moments, most of the dozen candidates on stage launched fierce broadsides against Trump over the Ukrainian scandal at the heart of the impeachment inquiry.

"The impeachment must go forward," said Senator Elizabeth Warren, who is neck and neck with former vice president Joe Biden at the head of the 2020 nominations race.

"Impeachment is the way that we establish that this man will not be permitted to break the law over and over without consequences," she thundered.

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2020 Election

Here are 3 winners and 4 losers from the CNN/NYT Democratic presidential primary debate

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Twelve Democrats took to the stage Tuesday night for yet another debate in the party's 2020 president primary hosted by CNN and the New York Times.

After only ten candidates qualified for the previous debate, an additional two — Hawaii Rep. Tulsi Gabbard and wealthy donor and former hedge fund manager Tom Steyer — made it to the stage this round for an even more crowded event.

The candidates discussed a range of important policy issues, but since the format was a debate, and they're all competing for the same nomination, it is ultimately most critical who won and who lost the night. Here are three winners and four losers — necessarily a subjective assessment, of course — from the debate:

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