Investing.com - U.S. President Donald Trump ramped up pressure on the Federal Reserve on Tuesday, slamming European Central Bank President Mario Draghi for comments that opened the door to more monetary stimulus in the euro zone and sent the single currency sharply lower.
Trump said in a tweet that the resulting drop in the euro relative to the U.S. dollar would make it easier for the bloc to compete against the United States.
Trump’s tweet added to pressure on the Fed to ease monetary policy, having raised interest rates from near zero to around 2.5% in the last three years. An interest rate cut would be the first from the Fed in a decade.
The Fed, which has faced repeated demands by Trump to cut interest rates, is expected to leave borrowing costs unchanged at its policy meeting on Wednesday, but possibly lay the groundwork for a rate cut later this year.
Expectations for multiple rate cuts later this year have risen during the past several weeks amid fears over the economic impact of the long running U.S.-China trade war, which have been underlined by recent weakness in economic data.
Earlier in the day, Draghi said the ECB will ease policy again if inflation fails to accelerate, signaling one of the biggest policy reversals of his eight-year tenure.
"In the absence of improvement, such that the sustained return of inflation to our aim is threatened, additional stimulus will be required," Draghi told the ECB's annual conference in Sintra, Portugal.
Draghi had said at his regular press conference earlier this month that all of the ECB's toolkit could be deployed if needed, whether that means cutting interest rates further below zero, or restarting quantitative easing.
--Reuters contributed to this report