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| Economy |
| Pres. Trump adviser Larry Kudlow calls on Fed to cut interest rates |
| 2019-03-31 |
| [Washington Examiner] Top Trump economic adviser Larry Kudlow called on the Federal Reserve Friday to cut interest rates in anticipation of a possible economic slowdown next year. The National Economic Council director said in an interview on CNBC that recent data on the markets for U.S. debt hint at speed bumps in about a year. "We’re not there yet, we’re not a year ahead, but it’s something you have to watch," he said. He then called on the Fed to cut its interest rate target by half a percentage point. "All’s I’m saying is, we want to open that throttle," he said. The Fed's target rate is currently 2.25 percent to 2.5 percent. When asked whether President Trump is unhappy with Fed Chairman Jerome Powell, a Trump appointee, Kudlow responded: "He’s our chairman, we’re not going to displace him." "It is up to the Fed," he continued. "I’m not here to criticize the Fed. I’m just saying this is our point of view." Trump has criticized the Fed in an unusually public manner, calling on the central bank, which was created to make economic decisions independent of politics, to keep rates low. The Fed has been raising rates in recent years in an effort to restore them closer to historic norms. |
| Posted by:Besoeker |
| #7 The Fed's charter way back when was to buy CORPORATE debt when times were tough, not US T-bills, notes, bonds, etc. Of course, that got corrupted to fund wars, etc. |
| Posted by: Clem 2019-03-31 21:40 |
| #6 good point by Abu, an increase in the yield of all T bills, notes and bonds across the board of 0.5% would increase govt borrowing costs by about $50B per year however, the yield is determined by many factors, not just the fed fund rate since many, many foreigner buy US debt for the imputed safety, so an increase in the fed fund rate by 0.5% would likely mean a smaller, say 0.2% increase in the treasury instruments |
| Posted by: lord garth 2019-03-31 14:13 |
| #5 How can the government keep borrowing money if the Fed raises rates? |
| Posted by: Abu Uluque 2019-03-31 10:57 |
| #4 the Federal Funds rate is one thing another, I think more important issue is the amount of debt the Fed is holding As a response to the 2008 meltdown the Fed added a huge amount to its portfolio of bonds. Before 2008 it was holding about $1.5 Trillion, by 2012, this had reached about $4.4 Trillion. In the past year, they have reduced it to about $3.9 Trillion but they have a long way to go to get it where it needs to go. Corporate debt is also very high (probably at least double the Federal Reserve debt holding) and needs to be reduced although that requires corporate governance. Raising rates a bit higher would help a bit both of these issues. As Kudlow would point out a slightly higher rate would inhibit business investment but in a healthy economy, business investment should be funded by profits and selling equity in companies. was there something in my coffee today to make me verbose like this |
| Posted by: lord garth 2019-03-31 10:20 |
| #3 What we think is irrelevant. The banks and money institutions like being at the Fed's tit for cheap money. My gawd, if they had to pay depositors real interest to get their money, the big boys may have to shrink their profit margins. Where are the six figure salaries and generous year end bonuses going to come from? /rhet question |
| Posted by: Procopius2k 2019-03-31 09:46 |
| #2 Usually like Kudlow, but no. Interest rates are still too low. |
| Posted by: no mo uro 2019-03-31 08:28 |
| #1 The Fed gave Obama 8 years of low low interest rates to banks and institutions. Suddenly, now they need to choke the recovering economy. They certainly don't work for you or me. |
| Posted by: Procopius2k 2019-03-31 08:19 |