Pence joins chorus: Fed should consider rate cuts

U.S. Vice President Mike Pence acknowledges the audience at the NRA annual meeting in Indianapolis
FILE PHOTO: U.S. Vice President Mike Pence acknowledges the audience at the 148th National Rifle Association (NRA) annual meeting in Indianapolis, Indiana, U.S., April 26, 2019.    REUTERS/Lucas Jackson

May 3, 2019

WASHINGTON (Reuters) – U.S. Vice President Mike Pence said on Friday the Federal Reserve should consider cutting interest rates given the absence of inflation in the economy, joining President Donald Trump and Trump’s top economic adviser in pressuring the central bank on monetary policy.

“There’s no inflation; the economy is roaring,” Pence said in an interview with CNBC. “This is exactly the time, not only to not raise interest rates, but we ought to consider cutting them.”

Pence made the remarks after the government released a report showing strong job growth last month and a drop in the unemployment rate to a more than 49-year low of 3.6 percent — a performance he credited to the Trump administration’s tax- and regulatory-cutting policies.

The independent central bank, whose policymakers pride themselves on standing above politics, held interest rates steady at a two-day meeting that wrapped up on Wednesday and signaled little appetite to adjust them any time soon.

Trump and the head of the White House National Economic Council, Larry Kudlow, have been calling for rate cuts from the Fed for weeks.

On Tuesday, Trump suggested in a tweet that the Fed should lower rates by a hefty one percentage point and buy bonds to drive borrowing costs lower. “We have the potential to go … up like a rocket if we did some lowering of rates, like one point, and some quantitative easing,” he wrote on Twitter.

The Fed normally moves in just quarter-point increments.

In an interview with Fox Business Network on Friday, Kudlow said he thought the Fed was mulling a rate reduction.

“With these low inflation numbers, I think the Fed is actually looking at rate cuts,” he said. “Our views right now intellectually are not really far apart from the Federal Reserve, best I can determine.”

(Reporting by Susan Heavey and Makini Brice; writing by Tim Ahmann; editing by Jonathan Oatis)

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