U.S. Federal Reserve Chairman from February 2018
U.S. interest rates: Where will they take us?
U.S. President Donald Trump worries that the Federal Reserve is raising interest rates too quickly. In fact, the Fed has engaged in only moderate tightening so far. By mid-2019, it is likely to end the cycle and hold rates steady, since the U.S. central bank is probably focusing on restricting the money supply rather than reaching an interest rate target. At that point, Mr. Trump will no longer be able to blame the Fed for any fiscal trouble and will have to implement reforms if he wants to spur growth.
Trump’s trade war is poised for a Pyrrhic victory
The flip side of the Trump administration’s drive to reduce the U.S. foreign trade deficit is that it will leave the rest of the world with fewer dollars to finance its budget deficit. President Trump could cut spending drastically or persuade the Federal Reserve to buy more bonds, but neither seems likely. More probably, he will do nothing as domestic rates rise and the dollar strengthens – widening the trade deficit again.
Janet Yellen considers her last act
Janet Yellen has done what was needed to leave behind fond memories of her term as Fed chief. She waited until the U.S. economy showed vigorous signs of recovery before announcing a soft-landing solution from the excessive liquidity inherited from Ben Bernanke. In part, this was a conscious choice to do what markets expected. But it may have been governed more by a long-term pessimism about the outlook for the economy.