Fed nominee Moore calls December's rate hike a 'substantial mistake'

Dwayne Harmon
March 25, 2019

The Fed has become increasingly anxious about meeting its 2 percent inflation target and skeptical that the Trump administration's tax cuts and deregulation will unleash faster economic growth. On Wednesday, the vast majority of Fed leaders indicated they do not foresee any rate hikes this year. And he contended that this approach, if adopted, would help accelerate economic growth above 3 per cent, compared with the longer-run average of 1.9 per cent that Fed officials have forecast.

'I don't care if I influenced or not. Asked about whether a rate cut is needed, he said "I'm not sure about that - I'd have to take a closer look at it".

Moore, who described himself as a "growth hawk" and an "independent voice" in an interview on Bloomberg Television, said the Fed made a "very substantial mistake" in December by hiking interest rates and that they have, "thank God, reversed that and changed directions".

Trump was so incensed by the Fed's policies he is said to have sought advice late past year on whether he could fire its chairman, Jerome Powell.

As a result, "I'm anxious more on the deflation side right now than the inflation side, " he said, pointing in particular to a broad-based fall in commodity prices in recent months.

"Presidents certainly use appointments to shape monetary policy -if the Senate is willing to go along, that is", said Sarah Binder, an economics professor at George Washington University.

Under the threat of constant second-guessing by the president, and potentially soon working with a Trump cheerleader inside the building, Fed officials may find it increasingly hard to stay focused on keeping the institution at a distance from politics. Last December, he wrote an op-ed slamming the Fed for raising interest rates, calling Powell "tone-deaf".

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The selection of Moore marks a deviation from Trump's previous choices for the board, toward a more public figure who has long pushed conservative economic and political ideology.

"I am open to all possibilities as we aim to support sustained economic expansion, strong labour market conditions, and inflation near the Committee's symmetric 2 percent objective", Bostic said, referring to the policy-setting Federal Open Market Committee.

America's secretive central bank - announced it had no plans to raise interest rates during 2019 (and would probably hike rates just once in 2020).

But he added, "over time obviously we want to reduce that balance sheet and not have these massive amounts of debt".

The spread between yields on three-month Treasury bills and 10-year notes fell below zero for the first time since 2007 after US manufacturing data missed estimates.

Moore joined CNN as a contributor in early 2017.

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