- President Donald Trump called Federal Reserve Chairman Jerome Powell to reduce interest rates to avoid economic slowdown. However, “it remains to see the amount of cuts that can slip in reality” when it comes to things like consumer goods and housing, which are especially exposed to definitions. In addition, if Trump shoots at the head of the central bank, this may lead to “amazing” counter -results.
The president wants low interest rates – this is not a secret. The central bank has repeatedly called for the reduction. “There can be almost no enlargement, but there can be a slowdown in the economy unless the master is late, a big loser, reduces interest rates, now,” President Donald Trump books On social media, referring to the Federal Reserve Chairman Jerome Powell.
But it may not be cut and dry. Neil Dutta, head of economic research at Renaissance Macro, warned that the central bank cannot resolve everything when it comes to tariffs and commercial wars.
“Keep in mind that the Federal Reserve does not have tools to compensate for a commercial war,” Dutta He said Monday CNBC. Think about the areas of economics that the trade war affects more.
Definitions It can stimulate inflation, but whether it happens to be one time shock to prices or still should be seen. It can cause definitions Slow downAlso, if spending on consumer and business decreases because things become more expensive. Because of these factors, the Federal Reserve is currently in waiting and vision. The interest rates cannot reduce the fear that inflation will become a problem again, but if the unemployment becomes a problem, the central bank may not have an option. In both cases, according to Dutta, the cuts in interest rates may not protect consumer goods or Housing From the effect of customs tariffs – an imminent slowdown, if it does not start already.
He said, “I think we are jumping into stagnation.” “We are in it. We are in it,” Dutta later said.
He believes that housing slows down, and spending on investment and moderate employment decreases. He said that the only thing that prevents the economy from collapsing to recession is a shift in politics, adding, “Once the reap of confidence comes out of the bottle, it is really difficult to return it.”
“This is never a key and stop with the president – it’s a tablet,” Dutu. “So if he extinguishes heat in one week, I mean, this can be restored in another week. So this type of uncertainty this wanders in the markets, I think, in the foreseeable future.”
Things were somewhat calmed down after Trump stopped in the tariff system on the day of liberation, which was nurtured in stock and bond markets. But nearly two weeks since then, the markets are still swinging, especially amid Trump’s verbal attacks against Powell. he Recently said The Federal Reserve Speaker could not come up with a speed enough, and this prompted a discussion about whether Trump could or will already launch the Central Bank’s head.
“We are already in the worst scenario of the economy,” said Dota. If Trump shot Powell and replaces him with a more political point of view, “it can be an amazing opposite results on Trump and will keep the long -term interest rates higher than it is.”
This story was originally shown on Fortune.com
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