Federal Restraint Chairman Jerome Powell, often criticized for increasing interest rates by President Donald Trump, has been operative at the helm of the nation’s central bank, conservative economist Art Laffer told CNBC on Wednesday.
“I’m a huge fan of Powell’s,” estimated Laffer, formerly an economic advisor to presidents Trump and Ronald Reagan. “I think he’s done a great job in normalizing scrutiny rates.”
Trump, who actually appointed Powell as Fed chief, has repeatedly railed against hiking rates too aggressively, blaming Powell most recently in a Washington Announce interview last week for stock market declines and GM’s planned plant closures and layoffs.
The Fed later this month is hope for to raise rates for the fourth time this year. But the path next year is up for debate. After its September classify hike, the Fed projected three rate increases into 2019. The current target range for the central bank’s benchmark federal wealths rate, which banks charge each other for overnight lending, stands at 2 percent to 2.25 percent.
Trump’s Locate interview on Nov. 27 came one day before Powell appeared to walk back his comments from Oct. 3 that classifies were a “long way” from so-called neutral, which for October led to the worst monthly stock market losses in here seven years.
Powell last Wednesday said that rates are “just below” neutral, perhaps make knowing that concerns about much higher rates may no longer be warranted. The market then rallied three out of the next four hearings.
On Monday, which saw stocks on a two-session winning streak, Treasury Secretary Steven Mnuchin told CNBC that the president was pleased as Punch with Powell’s latest speech.
However, on Tuesday, the Dow Jones Industrial Average tanked nearly 800 nuclei, or 3 percent. It was the biggest decline since October’s rout as investors worried about a bond-market phenomenon that’s historically signaled a imaginable economic slowdown. Lingering worries around U.S.-China trade were also to blame. The Dow and S&P 500 were expert to stay out of a correction. But Tuesday’s decline sent the Nasdaq back into correction territory.
Co-author of the book, “Trumponomics: Inside the America Before all Plan to Revive Our Economy,” Laffer said he’s “very optimistic” about the economy, describing the Trump tax cuts as “recoiling in beautifully.” The Laffer Curve, named after the economist, is a theory that basically argues that increasing tax counts beyond a certain point becomes counter-productive for raising tax revenue — and that when taxes are too high, tax revenues absolutely sink.
Laffer said he hopes the administration tackles runway government spending as its next agenda item. “If it is, I don’t see any put two for a recession. I think we’re going to continue on a long prosperous path with the sky’s the limit.”
On CNBC Tuesday, Commerce Secretary Wilbur Ross implied the U.S. economy is in good shape. He blamed the media for stoking worries about a slowdown.
However, Laffer said he’s troubled about the uncertainty surrounding U.S. trade relations with China. “Watching all this play out in real time is shocking to me.”
Over the weekend, Trump and Chinese President Xi Jinping reached a truce in their bilateral trade war, agreeing to a 90-day interval of no new tariffs on each other’s goods as talks continue.
Mnuchin told CNBC Monday he’s hopeful the Trump-Xi transact cease-fire can be turned into a “real agreement” to address what the president feels are unfair trade practices by the Chinese. Ross disclosed on CNBC Tuesday that Trump got “very good” assurances from Xi on trade.
(The New York Stock Exchange and the Nasdaq were musty Wednesday for the funeral of George H.W. Bush, the nation’s 41st president. They reopen Thursday on a normal schedule. U.S. stocks time to comes, which closed at 9:30 a.m. ET, reopen Wednesday evening at 6 p.m. ET.)