Trump Fed chair’s inflation strategy: leave it to the market | Eduardo Porter
Summary
President Trump’s new Federal Reserve chair, Kevin Warsh, suggested that the market should handle inflation control instead of the Fed acting directly. Warsh indicated that rising bond yields reflect a strong economy, but his approach raised concerns among investors and may weaken the Fed’s credibility.Key Facts
- Kevin Warsh is President Trump’s new Federal Reserve chair.
- Warsh said the market should tighten financial conditions without direct Fed intervention.
- Inflation in the U.S. is running at double the Fed’s 2% target.
- Recently, the Fed decided not to raise interest rates despite high inflation.
- The yield on 30-year U.S. Treasury bonds reached its highest level in 19 years.
- Stock markets fell after Warsh’s comments and bond market reaction.
- Investors worry Warsh’s approach may reflect political pressure from President Trump to avoid rate increases.
- Warsh proposed fewer Fed meetings and press conferences to reduce market guidance.
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