The hidden side of politics

Fed votes to hold interest rates steady, angering Trump allies

Reported by Washington Times:

The Federal Reserve held interest rates steady Wednesday and suggested no cuts are coming this year, setting up another potential clash between Chairman Jerome Powell and President Trump, who is pushing for a rate cut.

The central bank’s open market committee voted 9-1 to keep the benchmark interest rate in the range of 2.25% to 2.5%, where it’s been since an increase last December. St. Louis Fed President James Bullard voted to lower the rate.

Mr. Trump has been urging a reduction in interest rates, saying inflation is in check and the economy would grow at an even faster rate.

Economist Stephen Moore, who withdrew from consideration as a presidential nominee to the Fed this spring, criticized the decision not to cut rates.

“The Fed board’s decision to keep the federal funds rate unchanged shows that the board still doesn’t get the extent of the continuing threat of deflation,” Mr. Moore said in a statement. “Prices for commodities — from soybeans to oil — have fallen by roughly 10 percent over the past six months. For the past four months consumer prices have fallen below the Fed’s standard target.”

He added, “There is no threat of inflation anywhere in the economy and to stay on the virtuous Trump path of 3 to 4 percent growth with stable prices, the Fed should be pumping more dollar liquidity into the economy now.”

Mr. Moore is a columnist for The Washington Times.

Source:Washington Times