By Ramesh Ponnuru
Friday, April 18, 2025
People sometimes explain President Trump’s advocacy of
low interest rates by reference to the preferences of the real-estate industry.
But incumbent presidents usually want low interest rates regardless of their
earlier careers.
They are not always right to want them. President Biden
and his party would have been unhappy had the Federal Reserve started raising
interest rates in late 2021, but they would have fared better in 2024 had it
done so and delivered lower inflation than we ended up having.
Lower interest rates now and higher inflation later might
not work out well for President Trump and the Republicans either. And Powell
will be especially reluctant to cut them after Trump’s public complaints, since markets would take it as a
weakening of the Fed’s resolve to keep inflation low even in the face of
political pressure.
Public unhappiness about high inflation is the main
reason Trump won the election. It’s unwise for him to encourage higher
inflation now.
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