Vice President Pence pressures the Fed to cut rates
Vice President Pence commented in an interview with CNBC that after a strong April U.S. jobs report, not only should rates not be raised, but a rate cut should be considered.In principle, it is taboo for government officials to pressure the central bank.
Reference article:Why the central bank needs independence
It was President Trump who broke this rule. His criticisms of the Fed on Twitter have often made the news, and even Vice President Pence pressured the Fed.
In this kind of situation, after the FOMC, at the press conference, Chairman Powell stated that political statements would not be considered in policy decisions.Regarding the current policy stance, he also refrained from commenting on the rate cut that President Trump is asking for, emphasizing maintaining the current policy.
However, inflation is actually decreasing at the moment, which could be a sign of a rate cut. Market participants are voicing that a rate cut is necessary within the year.
If Powell's remarks were intended to show that they would not be influenced by calls for rate cuts, then changing policy to support a rate cut would contradict this meeting and could be seen as yielding to pressure.
Even if he had commented on rate cuts this time, he could still be criticized for yielding to the Trump administration...For Fed Chair Jerome Powell, rate cuts might be seen as “the tiger at the door, the wolf at the back.” It looks like a difficult navigation will be needed for a while.
(Excerpt from FPO official [FX/Stock Investment Support Newsletter] May 5, 2019 issue: “Dining with a genius stock trader / Vice President Pence pressure on the Fed to cut rates”)
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