Is Donald Trump right in criticising Jerome Powell?
Donald Trump recently said that without the rate s hikes implemented by the Federal Reserve, US growth would have been higher, the fiscal deficit smaller and share prices higher and, ther efore, that these interest rate increases had been a serious error. Is Donald Trump’s criticism justified? As the United States has returned to full employment, there is inevitably a slowdown in growth (which is returning towards the level of potential growth) , which has no thing to do with interest rates; Interest payments on the public debt have risen very slightly, the return to full employment shows that the cyclical fiscal deficit has fallen; If we compare long-term interest rates with their level at the time when the Federal Reserve’s interest rates were at the ir lowest, they are currently lower relative to growth; If we compare the PER on the S&P with that at the time when the Federal Reserve’s interest rates were at the ir lowest, it is also high currently. All things considered, the Federal Reserve’s rate hikes have had a very limited visible negative impact on the United States.