The Federal Reserve can fairly be said to be cutting interest rates because of Donald Trump. But the move has little to do with the unprecedented and buffoonish levels of political pressure this president is placing on the U.S. central bank, whose functioning is key to domestic and global economic stability.
Instead, Fed officials made clear in minutes from their July 30-31 meeting released this week that they are, instead, reacting to Trump’s erratic mismanagement of the economy.
Naturally the Fed, which is seeking more than ever to assert its political independence now that it’s facing frequent Twitter tirades from the White House, did not mention Trump by name.
But the vestiges of his deepening trade war, and the impact it is having on world economy and in turn the United States, were cited as the leading rationale for the easing of monetary conditions, which represented an about-face from predictions of a hike as recently as late 2018.
Officials with a current vote on the Federal Open Market Committee said that while “the overall outlook remained favorable, significant risks and uncertainties attending the outlook remained.”
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