McRocket
Gold Member
- Apr 4, 2018
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' - President Donald Trump's trade war could slow the economy and thus cause the Federal Reserve to pause in its current rate-hiking cycle.
- Trump has been critical of the central bank's policy tightening, but having it slow now could be a bad sign.
- Stocks thus far have weathered the trade storm, though there has been some recent weakness.
Among the unintended consequences from President Donald Trump's trade war is that it could cause the Federal Reserve to slow the pace of its interest rate hikes.
While Trump has spoken out against the central bank's policytightening and might be pleased if it stops raising interest rates sooner than expected, the move would be for the wrong reason, namely a slowing economy.
That's among the multiple quandaries that have arisen from the president's gambit to lower the national trade deficit and change agreements he has blasted as inherently unfair to the U.S.
"If you have a situation where tariffs have a significant enough knock-on effect and real growth is impacted in a sustainable way, it's a prescription for them to [follow a] shallower path for the funds rate," said Jacob Oubina, senior U.S. economist at RBC Capital Markets.
As things stand now, the Fed has indicated it plans to hike its benchmark funds rate twice more this year, with the market pricing in moves in September and December. In addition, officials have indicated that three more hikes could be on tap in 2019.
Trump has been critical of the policy tightening, saying he's worried that higher rates could thwart the substantial economic progress made during his administration.''
Trump might get his slowdown in rate hikes, but for the wrong reason
A trade war is bad for economic growth?
Well DUH.
- Trump has been critical of the central bank's policy tightening, but having it slow now could be a bad sign.
- Stocks thus far have weathered the trade storm, though there has been some recent weakness.
Among the unintended consequences from President Donald Trump's trade war is that it could cause the Federal Reserve to slow the pace of its interest rate hikes.
While Trump has spoken out against the central bank's policytightening and might be pleased if it stops raising interest rates sooner than expected, the move would be for the wrong reason, namely a slowing economy.
That's among the multiple quandaries that have arisen from the president's gambit to lower the national trade deficit and change agreements he has blasted as inherently unfair to the U.S.
"If you have a situation where tariffs have a significant enough knock-on effect and real growth is impacted in a sustainable way, it's a prescription for them to [follow a] shallower path for the funds rate," said Jacob Oubina, senior U.S. economist at RBC Capital Markets.
As things stand now, the Fed has indicated it plans to hike its benchmark funds rate twice more this year, with the market pricing in moves in September and December. In addition, officials have indicated that three more hikes could be on tap in 2019.
Trump has been critical of the policy tightening, saying he's worried that higher rates could thwart the substantial economic progress made during his administration.''
Trump might get his slowdown in rate hikes, but for the wrong reason
A trade war is bad for economic growth?
Well DUH.
