Trump and his new hand-picked Fed chair—whoever it will be—are going to clash ‘almost immediately,’ economists predict

On Wednesday, Trump said he will name someone “who believes in lower interest rates by a lot.” A week before that, after the Fed cut rates by a quarter point to 3.5%-3.75%, he complained that it could have been “at least doubled.” “Admittedly, the appointment of a new Fed Chair could trigger a bigger wave of policy loosening, but only if the Trump administration is willing to destroy the FOMC’s independence and inflation-fighting credibility, which may result in higher long-term interest rates,” Capital Economics warned. “Risks are balanced toward a more rapid rise in the unemployment rate that could lead the Fed to cut rates more rapidly and deeply,” Citi said in a note Thursday.

Author: Jason Ma

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