Monday, April 8, 2019

Making sense of Trump's pressure on the Fed

I am somewhat at a loss of why Trump is putting so much pressure on the Federal Reserve. In a recent CNBC interview, CEA chair Kevin Hassett projected that growth would rise again to 3% later this year. “Everything we see right now is teeing us up to have a year like last year - Q1 around 1.5% or 2%, then Q2 goes way north, carries you into a 3% year.”

After the BLS reported a strong than expected March Jobs Report last Friday, Donald Trump repeated his assertion that the Fed should shift to an easier monetary policy (via CNBC):
President Donald Trump said Friday the U.S. economy would climb like "a rocket ship" if the Federal Reserve cut interest rates.

Commenting after a strong jobs report for March, Trump said the Fed "really slowed us down" in terms of economic growth, and that "there's no inflation."

"I think they should drop rates and get rid of quantitative tightening," Trump told reporters, referring to the Fed's policy of selling securities to unwind its balance sheet, a stimulus put in place during the financial crisis. "You would see a rocket ship. Despite that we're doing very well."

The full post can be found here.

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