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President Trump should be content with the way the American economy is steamrolling ahead, yet the fact that he can’t get Fed chairman Jerome Powell on the same page with him on interest rates is a huge storm cloud on the horizon. Yesterday, Powell continued his wait-and-see approach on lowering interest rates, insisting that they stay between 4.25-4.50%. In fact, the most shocking news yesterday was that two Fed governors said they dissented with Powell and agreed with Trump that rates should come down a quarter percentage point. WOR’s Market Scoreboard host and CNBC contributor Ron Insana appeared on 710 WOR’s Mendte in the Morning program to explain why Trump and Powell can’t see eye to eye on this key economic stat.
“I think there’s a couple of things going on,” Insana told host Larry Mendte. “Number one, inflation hasn’t come down quite as much as the Federal Reserve would like, or more specifically, Jay Powell… This morning we just got the Fed’s preferred inflation gage, which is a little bit above expectations, running at about 2.8% annual rate, and we don’t know the full impact of the tariffs on consumer prices, so he’s willing to wait to see whether or not tariffs are going to cause inflation to reaccelerate and push prices up for consumers.”
Insana feels that Powell sees no reason to change interest rates because he sees economic conditions as good. “With an unemployment rate at 4.1% there’s no real urgency to lower interest rates. The stock market’s sitting at all-time highs. It’s not typically the environment in which you make any dramatic moves to lower rates, but we’ll see.”
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