President Trump and the Coming Rate Cuts

On Friday, President Trump weighed in on the Federal Reserve, claiming the central bank to be at fault for a slowdown in economic growth.

Trump challenged the New York Fed. President John Williams, who in a speech on Thursday suggested the Fed needs to cut interest rates the first sign of ZLB.

Their explanation for cutting rates this year states the Federal Reserve has measured a decrease in global growth and low inflation. Including with uncertainty caused by Trump’s recent trade war as the principal reasons as to why they have decided to make this step.

Many took William’s comments as a sign that the Federal Reserve will cut rates later this month. The proposed action is claimed to be based on his research of 20 years and not about potential policy actions at the upcoming FOMC meeting. The current benchmark U.S. interest rate is a range of 2.25 to 2.5 percent, a historically low level by standards, but the highest since the Recession consumed the global economy a decade ago. Williams did not confirm or deny whether he favors a cut, the cut will result between a 100% chance of a quarter-point reduction and a 38% probability cut by half a point. Fed leaders are set to announce what the outcome will be with the interest rate on July 31.

President Trump weighed in on Twitter with, “We are in a World competition, & winning big,” he added, “but it is no thanks to the Federal Reserve. Had they not acted so fast and so much, we would be doing even better than we are doing right now. It is our chance to build unparalleled wealth and success for the U.S., GROWTH, which would greatly reduce % debt. Don’t blow it!” The president has been quite hostile with the Fed’s moves for months, for a good reason too, for both a series of rate hikes and for not moving to cut rates sooner. Trump concluded, “We pay much higher interest rates than countries that are no match for us economically. In other words, our interest costs are much higher than in other countries, when they should be lower. Correct!”

Although it is unclear what the future holds for our economy, do you think it’s time to have rate cuts?


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