After the BEA’s first estimate of Q3 GDP came in hotter than expected (though, as we noted, troubling details lurked beneath the surface), Trump’s OMB Chief Mick Mulvaney defended President Trump and his criticisms of the Federal Reserve in comments to both Fox News and Bloomberg, while adding a few of his own.
Mulvaney insisted that Trump isn’t trying to influence the Fed’s decisions and that he “respects the independence” of the central bank. Rather, Trump is just “frustrated” that “every time things seem to start getting a lot better, the Fed pumps the breaks.” Mulvaney noted that many supply side economists share this view, and that he hopes “the Fed will give some though to the supply side” every now and then.
Following Friday morning’s GDP print, Mulvaney said that GDP growth “in the 3% range” will continue, though, as we noted, that would require an extraordinary stockpiling of inventories by US companies. He added that he doesn’t think Trump will fire Fed Chairman Jerome Powell (or try to, anyway).
And that maybe Friday’s 3.5% print would “take some pressure” off the Fed to keep raising rates, which sounded more like a threat than a thoughtful analysis of the Fed’s view (though core PCE missed QoQ), considering that strong growth will, if anything, give the central bank more wiggle room to hike rates more quickly.
Now that Mulvaney is on board, we wonder who will be the next key Trump official to step up the pressure on the Fed to maybe reconsider raising rates above “neutral”?
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