President of St. Louis Fed James Bullard argues that the current target range of rates at 0.5-0.75% corresponds to the sluggish economic growth and inflation, and therefore rates can remain low until the end of the year.
Despite the intentions of administration to lower taxes and raise infrastructure costs, hoping to revive inflation, inflation expectations remain low.
“Inflationary pressure doesn’t seem to be growing”, – he said.
The Fed raised rates in December, the second time in two years, and planned to accelerate the pace of monetary tightening.
But the victory of Donald Trump in the elections is a dual risk: on the one hand, the prospects for tax reform and fiscal stimulus could accelerate inflation, forcing the Fed to rush to increase interest rates, while on the other, the president’s migration policy and trade protectionism will not help improve the performance of the economy in the long term.
2017 will be the last year in the Fed for Yellen – according to experts
The current year will be the last for Janet Yellen as a chairperson of the Federal Reserve System. President Donald Trump will not renew her mandate for another term and will find a replacement.
About this in his interview to “Bloomberg” said Tom Porcelli, senior economist at RBC Capital Markets in the USA.
“Leaders of the US Federal Reserve under President Trump are likely waiting for a change. We can say that this is almost certainly going to happen, it is a settled question. When the term of Janet Yellen’s office as the head of the Fed expires in February 2018,Trump won’t retain her for a new term.
As for possible candidates for the post of the Fed’s chairman instead of Yellen, the discussion of candidates, in my opinion, will continue. It is likely that the Fed will be headed by someone whom we still do not know, whose candidacy was not even considered. We must understand that this is a classic development, when the new president appoints a new head of the Fed.”
In his interview to CNBC, Mark Grant, chief strategist at Hilltop Securities, said that “the days of academics at the Fed are numbered.”
“In my opinion, at this stage the things the Fed’s officials say do not matter in practical terms, because Mr. Trump will be able to appoint three members of the Fed’s Board of Governors. I think, they will be business representatives and the days of academics and economists at the Fed are numbered.
I also believe that Trump’s administration will go to perceptible increase in expenditure, including military sphere, and new people in the Fed will provide him the persistence of low interest rates. So all this talk that the Fed will raise rates three or even four times is, in my opinion, just nonsense.”