Wednesday, December 12, 2018

Trump vs. The Federal Reserve Board: Will Interest Rates Be Raised Next Week?

President Donald Trump
President Donald Trump is in the face of the Federal Reserve Board, again.

During an interview with Reuters on Tuesday, Trump said it would be a mistake if the Fed raises interest rates when it meets next week.

Will Trump be able to intimidate the Fed into not hiking rates next week?

Very unlikely.

Trump said he needed the flexibility of lower interest rates to support the broader U.S. economy.

“You have to understand, we’re fighting some trade battles and we’re winning. But I need accommodation too,” he said.

Of Fed Chairman Jay Powell Trump said, “I think he’s a good man. I think he’s trying to do what he thinks is best. I disagree with him. I think he’s being too aggressive, far too aggressive, actually far too aggressive.”

The Fed's monetary policy committee, the Fed Open Market Committee, meets next week on December 18-19.

It is fully expected that following the meeting the Fed will announce that it has raised the interest rate it controls, the Fed Funds rate, by 25 basis points.

The hike would be the ninth in the current series of hikes which began in December 2015.

Austrian-lites at the time thought the first hike would crash the stock market and send the economy into a recession. Some even argued that the first rate hike would have to be reversed.

Of course, as I argued at the time, nothing of the sort has occurred. The stock market and economy continued to boom until recently.

Trump said he continues to believe the economy is in fine shape.

“Are we heading for a recession?” Trump said. “In my opinion, we are doing really well. Our companies are doing really well. If the Fed is going to act reasonably and rationally, I think we’ll go - I think we are a rocket ship going up.”

On the other hand, I have only recently started warning in the EPJ Daily Alert that a recession may be near.



  1. Why don't you post articles like these more often?

    1. Subscribe to the EPJ Daily Alert and you will see coverage like this every day.