Source: Fortune
Summary
President Donald Trump has expressed his disapproval of a potential interest rate hike by the Federal Reserve, saying it would be the “wrong thing to do.” Trump’s comments come as his nominee, Kevin Warsh, prepares to chair his first Fed policy meeting on June 16-17. The US jobs report for May showed strong growth, leading to bets that the Fed will raise interest rates to control inflation. Trump, however, believes that good economic reports should not lead to rate hikes and instead suggests that interest rates should be lowered.
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The numbers tell one story.
Trump’s comments on interest rates are at odds with market expectations, which have priced in a quarter-point rate hike by the end of the year. Warsh, who has been nominated to head the Fed, will face pressure to raise borrowing costs to contain inflation. Trump’s frustration with the Fed’s potential actions is evident, as he believes that good economic reports should not lead to rate hikes. The Fed’s decision will be closely watched, as it will impact the US economy and Trump’s approval ratings. Trump’s statement that “success can kill inflation just like higher interest rates” suggests that he believes economic growth can control inflation on its own.
Trump is trying to have it both ways: he wants to take credit for a strong economy, but he doesn’t want the Fed to raise interest rates to control inflation.
Author: Evan Null
