Fed chair expectations moved into focus after President Donald Trump called for lower interest rates following stronger-than-expected U.S. economic growth. He said strong expansion should prompt easier monetary policy rather than tighter conditions, especially when output continues to exceed forecasts.
Trump Sets Expectations for Next Fed Chair After GDP Data
Trump posted his views on Truth Social after the publication of U.S. GDP data. He criticized the Federal Reserve for increasing rates when the economic indicators are doing well. To him, the issue of inflation remains stronger than indications of actual growth.
CoinGape as reported before, the U.S. GDP increased to 4.3% in Q3. It was a higher reading than analyst expectation. The report noted the strength of the economy in its activities despite the recent political and fiscal upheavals.
According to Trump, policy responses have changed over the years. He said, positive economic news no longer causes supportive policy action. Rather, more powerful data is commonly received with containment policies in case of future inflation.
The president referred to his opinion as the direction of the next Fed chair. Lower rates, he said, should accompany periods of solid growth. Decisions, he added, should be grounded in present conditions rather than theoretical risks.
Hassett Backs Rate Cuts as Growth Lifts Output
That view was bolstered by Kevin Hassett, the director of the National Economic Council. In a CNBC interview, Hassett said the Federal Reserve was lagging behind as growth picks up.
Hassett cited structural changes that are reshaping the economy. Productivity gains across industries, he said, are being driven by advances in artificial intelligence. Those gains, Hassett says, can drive up output while keeping inflation pressure at bay.
Hassett mentioned trade policy as one of the factors fueling growth. Tariffs brought down the U.S. trade deficit. He said the switch had added about 1.5% points to overall expansion.
Attention has focused more on leadership at the central bank. Jerome Powell’s term as Fed chair expires in May. A replacement is expected to be announced by President Trump in the coming months.
Hassett is widely considered a top contender. He stressed the importance of Fed independence. Consensus among members of the Federal Open Market Committee, he said, is important. Interest rate policy needs to come from the data and shared judgment, Hassett said.
Trump’s renewed push for lower interest rates has brought attention back to where monetary policy is headed. Strong economic growth has directed attention toward the Federal Reserve’s next policy move.
Source: https://coingape.com/trump-calls-for-rate-cuts-as-fed-chair-favorite-says-u-s-lags-on-lowering-rates/
