Economics
Trump May Get His Rocket If the Fed Juices Growth, But It Won’t Last
- President urges big interest-rate cut, fresh bond purchases
- Easier credit would eventually stoke inflation, economists say
Runners pass the Marriner S. Eccles Federal Reserve building in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The U.S. economy might indeed take off like a rocket if the Federal Reserve acquiesces to President Donald Trump’s demand that it open the monetary spigots. The trouble is that such a radical shift would increase the risk of crash-landing later.
Economists said a huge dollop of cheaper credit could spur growth in the short term by boosting spending by consumers and companies. But it’s also likely to revive what until now has been quiescent inflation, eventually forcing the Fed to slam on the brakes in response.