Home Business Trump again calls on Fed to juice an already-strong economy – CNN

Trump again calls on Fed to juice an already-strong economy – CNN

16 min read
0
72
Loading...
 


New job numbers for the month of June came in stronger than expected at 224,000, a sharp rebound from a dip in May, and the report also showed Americans continuing to come off the sidelines of the economy to look for work.
Yet Trump said Friday that he still wants a cut in interest rates, which he argued would “skyrocket” America’s economy.
“If we had a Fed that would lower interest rates, we would be like a rocket ship,” Trump said before heading to Bedminster, New Jersey, for the long holiday weekend.
He added, “We don’t have a Fed that knows what it’s doing.”
The President has repeatedly bashed Jerome Powell — his pick to lead the US central bank — for raising rates last year just as Republicans were trying to goose the economy with tax cuts.
The central bank, however, has long been concerned with avoiding inflation, which could be triggered by lower rates. Policymakers have also been pushing to slowly raise rates from their historic lows, where they’ve remained since the 2008 financial crisis, in order to provide more cushion in case of another recession.
In recent months, though, Powell has reversed course, indicating he’s open to a rate cut later this year — though he’s indicated that’s because of global uncertainty created by Trump’s trade wars, not because of the President’s demands.
Last month, Powell said the case for a rate cut had strengthened without offering a guarantee, pointing to the elevated risks that had reemerged with “greater uncertainty” over progress made in trade talks and renewed concerns over the strength of the global economy.
“The question my colleagues and I are grappling with is whether these uncertainties will continue to weight on the outlook and thus call for additional policy accommodation,” Powell said at a Council on Foreign Relations event in New York.
Trump’s drumbeat has been adopted by his top economic advisers, Larry Kudlow, director of the National Economic Council, and Peter Navarro, the President’s top trade adviser, who preempted Trump on Friday with their own calls for lower rates despite the strong jobs report.
“There’s no question that the Fed raised rates too fast,” said Navarro. “He doesn’t understand the power of President Trump’s deregulatory agenda, the tax cuts that are allowing us to grow with zero inflation,” referring to Powell. “This is the bottom line. There is no inflation in the economy when he raised those rates. He cost us a full point of growth.”
Speaking on CNBC, Kudlow said the Fed should “take back the interest rate hike” it made in December, pointing to a “rock-bottom” inflation rate, which has been hovering below the central bank’s 2% target.
Buoyed by a strong job market and steady growth, Powell stepped into his role in 2017 pledging to slowly bring interest rates back up from historically low levels, where they’ve languished since the Great Recession a decade ago. But while the economy has remained steady, Trump has injected an element of uncertainty since 2018, imposing tariffs on steel and aluminum imports as well as on billions of dollars in Chinese goods.
It’s that uncertainty that drove the Fed to leave all options on the table, including possible rate cuts as early as July. Policy makers declined to vote in favor of a shock rate cut in June, keeping their habit of telegraphing their plans to markets to avoid flash crashes or spikes.
Policy makers also wanted to see the outcome of a high-profile meeting between Trump and Chinese leader Xi Jinping on the sidelines of the G20 meeting in Japan before making any firm decisions.
Adding to the uncertainty, Trump on Friday renewed his threat to impose more tariffs on Beijing as negotiators returned to the table after agreeing to a temporary truce.
The United States has imposed tariffs on $250 billion in goods — and threatened to slap economic penalties on another $300 billion of goods on China — if the two countries fail to reach a deal.
Powell has already noted that business confidence has waned as a result of ongoing tensions coupled with the market volatility.
“The amount of tariffs that are in place right now are not large enough to represent, itself, a major threat to the economy,” Powell said in New York. “The concern is more around the loss of confidence or financial market reaction.”

Let’s block ads! (Why?)



Source link

Loading...
 

Check Also

David Stern, former NBA commissioner, undergoes emergency surgery after brain hemorrhage – Fox News

Loading...   Former NBA Commissioner David Stern, who guided the league through a rem…