Federal Reserve Chair Janet Yellen may well be thinking it. Jeffrey Lacker, president of the Richmond Fed, came close to saying it. “A more stimulative fiscal outlook usually warrants higher policy rates,” Lacker said a week after Donald Trump won the presidency. Translation: Trump’s plans to stimulate economic growth could inspire the Fed to move in the opposite direction. Such a move, which would put the U.S. president and its central bank at odds, is called a monetary offset.
An effort by a central bank, which guides monetary policy, to use an increase in interest rates to tamp down economic growth spurred by spending or tax cuts -- the fiscal policy -- of its government.
