Trump is set to win the battle on interest rates, but US economy will pay the price

Donald Trump pushed the Federal Reserve to raise rates, but the policy could backfire on president’s economic plan

Donald Trump spent much of his campaign for the White House attacking the Federal Reserve chief Janet Yellen. Shouting at the camera in the first presidential debate, he even went as far as to accuse the head of the central bank of “being political”, spurring her to deny she was anything but impartial.

Trump’s anger was a lightning rod for American savers, who like savers across the developed world, have suffered eight years of ultra-low interest rates. A rate rise this week will be taken as another sign by commentators that the Fed is slowly capitulating to the new president’s tub-thumping campaign.

In December, the Fed raised interest rates for the first time in a year, and only the second time since the 2008 financial crisis, up 0.25 percentage points to a band between 0.5% and 0.75%. Three further rates increase are predicted for 2017.

The latest jobs figures published on Friday, which bounced much higher than analysts expected, make it a racing certainty the first of these three will take place on Wednesday.

Yet the jobs figures are a legacy of the Obama presidency and nothing to do with Trump. Neither is the good news from the manufacturing sector or pretty much any other economic indicator, except the stock market, which could be said to have benefited from a significant Trump bounce.

Read More

Source By https://www.theguardian.com

  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  

Related posts