Wednesday, May 1, 2019

The Fed is About to Ignore Trump's Rate Cut Demand

Later today at 2:00 PM ET, the Federal Reserve Bank will issue its interest rate policy decision.

It will be an in your face rebuke of President Trump's demand yesterday via tweet, that the Fed cut interest rates by 1%.

The Fed will leave rates unchanged at the current 2.25% to 2.50% target range for Fed Funds. There will be no cut, never mind a full 1% cut. This is a layup prediction.

In time, it will become obvious that Trump cannot run the economy by tweet.

The Fed is not listening and Saudi Crown Prince Mohammed bin Salman ignored Trump's tweet to bring down oil prices.

And things are only starting to get crazy. What happens if the acceleration in price inflation really starts to take off? What is Trump going to tweet then?


UPDATE (11:44 AM ET)

I hasten to add that although there will be no change in the Fed funds rate, the Fed may make a technical adjustment to what is known as the IOER. That is the interest rate paid by the Fed to banks who keep funds "excess" reserves on deposit with the Fed. The Fed might lower the interest rate they pay on these reserves.

1 comment:

  1. He will tweet "price controls!" because he has no philosophical base to guide him and has picked the wrong advisors to advise him.