Trump, Fed Chair Exchange Barbs Over Interest Rates

[Webster]

(The Guardian) Trump calls on Fed's Jerome Powell to cut interest rates
Donald Trump has called on Federal Reserve chairman Jerome Powell to cut interest rates, saying it was the “perfect time” to do so.

In a post on his Truth Social platform, the president wrote: This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!

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Fed's Powell warns high inflation and slower growth could be here to stay, as Trump tells him to cut interest rates
Meanwhile, Jerome Powell has been speaking in Virginia.

Donald Trump’s new tariffs are “larger than expected” and the economic fallout including higher inflation and slower growth likely will be as well, the Federal Reserve chair said on Friday in remarks that pointed to the potentially difficult set of decisions ahead for the central bank.

Powell said in prepared remarks for a business journalists’ conference: We face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent.

Powell said it was not the Fed’s role to comment on the Trump administration’s policies but rather to react to how they might affect an economy that he and his colleagues regarded just a few weeks ago as being in a “sweet spot” of falling inflation and low unemployment. -- As the new policies and their likely economic effects become clearer, we will have a better sense of their implications for the economy and for monetary policy. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.

 

[Trush Jodie]

I think the economy would benefit more from a cut on interest rates. It would stimulate more production in the economy.

 

[Webster]

I think the economy would benefit more from a cut on interest rates. It would stimulate more production in the economy.

True but you have to be careful about the amount you cut them by.

Too low and the economic engine stalls out, too much and you risk overheating it. Just like w/taxes (the Laffer Curve reference there) there is a sweet spot w/interest rates where, at just the right point, you can get the economy roaring but w/out any nasty aftereffects.