Uncertainty over Trump program dominated Fed meeting
By
Nick Beams
6 January 2107
While he was not physically present at the Federal Reserve open market committee deliberations on December 13–14, nor does his name even appear in the minutes released this week, but incoming US president Donald Trump was certainly a kind of éminence grise at the meeting.
Held some five weeks after the election amid a surge in the stock market resulting from Trump’s victory, the meeting, which decided to lift the Fed’s base interest rate by 0.25 percentage points, was dominated by discussion about what the new president’s policies would mean for the US and indirectly the global economy.
Trump has foreshadowed major cuts in corporate and personal income tax rates, a boost to infrastructure by providing large tax write-offs for construction firms while providing them with part ownership of completed projects to provide an income stream, deregulation of finance, energy and other key areas of the economy and a strident “America first” policy on trade.
As the minutes noted, in their discussion of economic forecasts “participants emphasized their considerable uncertainty about the timing, size and composition of any future fiscal and other economic policy initiatives as well as about how these policies may affect aggregate demand and supply.”
As if to underscore the lack of any clear perspective, the minutes continued: “Several participants pointed out that, depending on the mix of tax, spending, regulatory and other possible changes, economic growth might turn out to be faster or slower than they currently anticipated.”
The sum of this “wisdom” is that the US economy could go up, or it could go down.
At her press conference immediately following the meeting, Fed chairwoman…