Federal Reserve Does Exactly What Trump’s Long Wanted

But not for the same reason.

In fact, quite the opposite. Trump’s been hounding the Fed to stop raising interest rates because he says making money more expensive (which is what raising interest rates does), is interfering with his economic miracle.

The Fed initially responded by suggesting growth triggered by Trump and Republican’s $1.5-trillion tax cut, mostly to corporations, rekindled the possibility of inflation. And the Fed’s #1 responsibility really, is ensuring the U.S. economy never goes into an inflationary spiral, even if that means having a slightly more (or less as the case may be) aggressive monetary policy than might be called for by present situations at any given time.

Another reason for the Fed to naturally lean toward raising rates when the economy is booming, is it gives them room to lower them if the economy starts slowing. If interest rates are already at or close to zero at the beginning of a Recession, the Fed possibly not being able to turn to its first line of defense because it doesn’t have any room to stimulate the economy by lowering rates, could create a long-term economic disaster. And even though the Fed nudged rates up last year, they’re still close to historically low levels, so that’s even a risk right now.