Low inflation in the US is a “beautiful thing”, Donald Trump said on Tuesday as he renewed his attack on the Federal Reserve and suggested currencies including the euro were “devalued against the dollar”.

The US president’s comments, on Twitter, came moments ahead of the release of inflation data that showed producer prices rose in May by their slowest annual pace in more than two years, and ahead of consumer price figures on Wednesday.

Responding to a tweet from Bloomberg’s opinion writers asking how European landmarks might be able to “stop tourists from coming”, Mr Trump said: “This is because the euro and other currencies are devalued against the dollar, putting the US at a big disadvantage. The Fed Interest rate way too high, added to ridiculous quantitative tightening! They don’t have a clue!”

He followed up with a separate tweet, saying: “The United States has VERY LOW INFLATION, a beautiful thing!”

Data from the Bureau of Labor Statistics this morning showed the headline producer price index dropped to 1.8 per cent in May from a year ago, owing to a decline in energy prices. That is the index’s lowest level since January 2017 and was down from the 2.2 per cent pace in the previous month, the equal quickest clip of 2019.

It was weaker than the median forecast of 2 per cent from economists in a Refinitiv survey.

Factoring out prices for food and energy, the core PPI eased to 2.3 per cent in May — the slowest in 16 months — from 2.4 per cent the month before, but in line with Wall Street’s expectations.

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Top Fed officials, including chairman Jay Powell, have suggested they are willing to cut interest rates if the global outlook deteriorates sufficiently, particularly if the US’s trade war with its allies drags on.

Given the labour market has been a bright spot for the US economy, data last week showing a slowdown in US jobs growth in May has intensified debate over whether the Fed needs to cut interest rates to support domestic growth.

Renewing his months-long criticism of the Fed’s monetary policy stance, Mr Trump said earlier this week it had been “very, very disruptive” by raising interest rates too quickly, thereby giving China an edge in trade negotiations.

Inflation data due on Wednesday are expected to show the headline consumer price index rose 1.9 per cent year-on-year last month from a 2 per cent pace in April, and for core inflation to remain steady at 2.1 per cent. Retail sales, which should give an indication as to the health of the US consumer, are due on Friday.

The US dollar index was flat in morning trade in New York at 96.733, but is trading about 1.5 per cent away from an almost two-year high struck in April. The euro was also flat at $1.1317, although trading in both currencies had seen them swing between positive and negative territory.

The S&P 500 was up 0.8 per cent in early trade, while the yield on the policy-sensitive two-year Treasury rose 3.4 basis points to 1.9337 per cent.

Via Financial Times