PoliticsUSA

The Federal reserve is under the control of the administration?

Donald trump would like to fill two vacancies on the Board of governors of the Federal reserve system (FRS) candidates who share its stance on the absence of a direct correlation between rapid economic growth and increased inflation.

“The white house would like to see highly efficient, competent people, who understand that the strong pace of economic recovery may not be accompanied by increased inflation,” said economic adviser to the White house Larry Kudlow. The Federal open market Committee (FOMC) raised the benchmark interest rate in 2018 four times to its current level of 2.25-2.5% per annum.

The Central Bank justifies the tightening of monetary policy because the grip of the American labor market, resulting from rapid economic growth can increase inflation at a time when the U.S. economy is moving ahead at full speed. The fed expects the rate hike to prevent inflation or a bubble in financial markets.

Many fed officials, however, share the position of the trump that the strong pace of economic recovery does not necessarily cause inflation if productivity increases faster, writes The Wall Street Journal. According to L., Kudlow, increased productivity means that more people can get higher salary, and it will not provoke the growth of inflation.

The white house insisted that the recent tax cuts, easing regulation and other measures will eventually lead to a significant increase in performance. The Federal Reserve considered such a course of events is possible, but not sure.

Last year, trump has repeatedly criticized the policy of the Central Bank, and the media wrote that he is considering the possibility of dismissal of the Chairman of the fed Jerome Powell. At the end of December, however, he expressed confidence in George.Powell expressed confidence that the fed “will soon realize” that “raises too fast.” The fed has signaled that it will not change rates at the meeting on 29-30 January and don’t intend to hurry in further tightening of monetary policy, planning to carefully study the situation in the US economy. Currently, the Board of governors of the Federal reserve are only five seats out of seven.

Former fed economist Nellie Liang put forward to the Board of D. trump in September 2018, earlier this month withdrew his candidacy.

Another candidate for D. trump, was a Carnegie Mellon economist Marvin Goodfriend, however, given the fact that from the 3 January in the United States has a new Congress, the President will have to nominate M. Goodfriend, if he wanted his promotion to the Board of governors of the Federal reserve.

Source:news.rusrek.com
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