How Trump’s Fed Showdown Could Trigger a Global Financial Earthquake – Are You Ready?
Central bankers, on the other hand, have a mandate to curb inflation, and their principal weapon to do so is higher interest rates.
So last week, the Fed was widely expected to hold rates, despite pressure from the White House to cut them.
The Fed’s argument is that after a weak first quarter the economy is now growing strongly at an annual rate of 3 per cent, employment is rising, and inflation is running at 2.7 per cent, well above the target of 2 per cent.
Rationally, the Fed is right. It is also right as far as the markets are concerned, because they are seriously concerned about the size of the US fiscal deficit and the way in which that will be financed.
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