Some Fed officials calling for reconsideration
President Donald Trump has been calling for a cut in the interest rates for a while now saying that they are hindering economic growth. His constant rallying for this seems to have convinced the president of the St Louis Federal Reserve James Bullard as he came out on Friday and said that he felt like the central bank’s current monetary policy has been “a little tight” and hinted at them being reconsidered.
This is being viewed as a win by the Trump led Whitehouse. While Bullard himself has made no direction of cutting the interest he has acknowledged that the low level of inflation and expectations in the financial markets do look healthy to implement some changes.
The inflation benchmark is ideally 2% when the real rate is measured against a zero inflation, but the Fed’s benchmark has been set in the range of between 2.25% and 2.5%. He went on to say that he felt like the current economy warrants a reconsideration of the inflation expectation to 2% which he feels would be greatly profitable to the Fed in the future.
In January the Fed did take an integral decision in saying that it would be “patient” in implementing its changes to monetary policy. The Fed in March decided to change its rate forecast to no hikes in the interest in comparison to the originally predicted 2 in the year.
Donald Trump came out earlier this week saying he expects to see a full percentage point reduction in view of the unemployment rates being at an all-time low. In lieu of the increasing pressure from the Whitehouse and now signs of members of the Fed considering these suggestions, a change in monetary policy seems more and more likely.