Trump policies require extra stimulus, according to the San Francisco Fed President. Moreover, he believes it is reasonable to have 3 hikes in 2017.
6 January, AtoZForex – Earlier last year, Federal Reserve policymakers forecasted three increases in the interest rate across the US in 2017. San Francisco Fed President, John Williams, has stated that such decision is a “reasonable” evaluation of what the Fed should do at a time of unemployment is on the decline. Moreover, the US inflation is rising currently, according to Mr. Williams, and this is also a factor for 3 interest rate hikes in the current year.
Fed Williams on Fed rate hike pace
John Williams has stated:
“The central tendency of the views of my colleagues -- around three rate hikes -- that’s, I think, a very reasonable view.”
Earlier last year, Fed authorities have surprised markets when their interest rate pace outlook changed from 2 to 3 rate hikes in 2017. During their meeting on the 13-14 December, Fed officials have decided on a quarter percentage rate increase, from 0.50% to 0.75%. Moreover, they forecasted higher growth based on a potential boost in the fiscal policy.
As a fact, Donald Trump is planning some fundamental changes in the US economy stance. As soon as Trump will take the office, he promised to cut the personal and corporate tax, increase the government spending and revise NAFTA agreement. NAFTA agreement is the North American Free Trade Agreement. Such agreement is inked by Canada, United States, and Mexico. During his campaign, Donald Trump claimed that this agreement harms US economy.
Donald Trump takes White House office on the 20th of January, 2017. His policies are expected to boost the inflation across the US. Moreover, his administration is most likely to drive a steeper pace of the interest rates hikes in 2017, according to the market analysts.
Trump policies require extra stimulus
Mr. Williams has also stated:
“All of these issues around fiscal policy and other policy are things that we study very closely and analyze. From my perspective, we don’t know what’s going to happen.”
Reportedly, it can the months for Congress to reach consensus on the new policy proposals before the actual signing procedures and implementation. Furthermore, Williams has mentioned that “relative to a few months ago, I think the distribution of likely outcomes in terms of fiscal policy is probably more stimulus than I was thinking a few months ago, and I built that into my own view.”
Mr. Williams also made it clear he thinks that the new administration might need more fiscal stimulus.
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