US Presidential Election 2016: Donald Trump blasts US Federal Reserve for creating a "false economy"

Jake Cordell
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Trump has issued a number of conflicting statements over where he stands on the issue of interest rates
Trump has issued a number of conflicting statements over where he stands on the issue of interest rates (Source: Getty)

Donald Trump has hit out at the US Federal Reserve, saying the era of record low interest rates since the financial crisis has created a "false economy".

On the campaign trail in the key swing state of Ohio, the Republican presidential nominee waded, once again, into the thorny issue of monetary policy, stating the Fed would have to change tact and raise interest rates.

"They're keeping the rates down so that everything else doesn't go down," Trump initially said, seeming to imply he agrees with the policy. However, he turned the issue into a political attack, adding: "We have a very false economy. At some point the rates are going to have to change.

"The only thing that is strong is the artificial stock market."

Read more: Yellen says rate rise is nearing

Trump previously caused a small controversy by suggesting he would replace Janet Yellen with a Republican as chair of the central bank. However, he fell short of saying he would try to oust Yellen before her term expires in 2018.

The billionaire candidate has also appeared to change his stance over whether he is in favour or opposed to the Fed's low interest rate policy.

In May, he said of Yellen:

She’s a low interest-rate person, she’s always been a low interest-rate person … and I must be honest, I’m a low interest rate person. If we raise interest rates, and the dollar starts getting too strong, we’re going to have some very major problems.

- Donald Trump

However, during the Republican primaries last November, before the Fed raised rates for the first time since the recession, he accused Yellen of keeping rates too low for too long for political reasons and attacked Barack Obama for putting pressure on the Fed chair.

Markets are still divided over when Yellen will pull the trigger on the next interest rate rise. Fed officials insist that she could raise rates this month, although outsiders seem to believe she is likely to wait until after the election so the central bank does not risk amplifying any pre-vote uncertainty in the world's largest economy.

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