- Trump claimed that if it wasn’t for the decisions of Federal Reserve Chairman Jerome Powell, the U.S. economy would have expanded above a 4% annual rate in 2018. “Frankly if we didn’t have somebody that would raise interest rates and do quantitative tightening, we would have been at over 4[%] instead of a 3.1[%],”The Fed kept its key policy target unchanged at 2.25% to 2.5% on Wednesday.
- Chairman Powell said he would remain “patient,” monitoring incoming data and developments in the global economy, and would be unlikely to move on interest rates until early next year.
- Powell says economic theory of unlimited borrowing supported by Ocasio-Cortez is just ‘wrong.’ The notion behind what is called “Modern Monetary Theory (MMT),” is that as long as the Fed can keep interest rates low without sparking inflation, the national debt and budget deficit won’t be an issue. MMT has been espoused by politicians including Rep. Alexandria Ocasio-Cortez, D-N.Y., and Democratic presidential candidate Sen. Bernie Sanders of Vermont.
- Powell conceded that he has not read up on the theory but said he has heard some “pretty extreme claims” about how it might be implemented.
- Trump finally got what he wanted from Powell and the Fed. As part of the Fed’s latest decision on interest rates, projections showed the central bank no longer expected to raise interest rates at all in 2019 and expected to raise just once in 2020. While Trump was surely pleased to see that, the president might want to shield his eyes when it comes to the rest of the Fed’s statement, as the sudden pause in interest-rate hikes was largely due to the perception that the US and global economies are slowing.
- Treasuries surged, driving 10-year yields to the lowest level since January 2018, as Federal Reserve officials wiped out interest-rate hikes from their median projection for this year and said they’d stop shrinking the central bank’s balance sheet in about six months.
- Previous: The Jay Powell Show on the 19th at 2 p.m. Eastern Time.
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- Previous: Is Fed Tightening Going to Cause a Recession? Many Experts Think Yes!
Fed’s Jay Powell, Interest Rates, and Trump
