Trump Wants the Fed to Roll Back the U.S. Economy
Higher interest rates could revive manufacturing and exports. That will hurt consumers and workers.
Any cuts in U.S.-China trade won’t be painless.
Photographer: Johannes Eisele/AFP/Getty Images
Doves on the Federal Reserve evidently have a vocal ally in President Donald Trump. He said recently that he's "not thrilled" about the Fed increasing interest rates – a move the central bank is expected to signal this week, without yet doing so.
The president’s concern comes at the same time that interest rate watchers are getting nervous about how rapidly the yield curve is flattening, with the rates on 2-year and 10-year notes continuing to converge. While it seems likely for now that the Fed will continue to increase interest rates at least until back to the Fed's estimation of "neutral" or the yield curve inverts, a pause at that level has the potential to signify the Fed has finally gotten past the era of high interest rates, a precedent set in the 1970s. Doing so would help reorient the economy in the direction in which Trump hopes to move it.