WASHINGTON ¨C The wide gulf between the administration of U.S. President Donald Trump and the U.S. Federal Reserve over where interest rates ought to be masks the fact that the two sides have begun to share a consensus about the near-term economic outlook.
Both those inside the central bank and Trump¡¯s economics team are looking to productivity to boost the economy without increasing price pressures, and in general agree that tariffs won¡¯t cause persistent inflation and have an expectation for continued solid economic growth.
The alignment is not perfect, and there is a particularly big gap in attitudes about how to manage risks. The administration argues for an all-in bet on productivity tempering inflation and allowing immediate and deep Fed rate cuts, while Fed officials want more proof ?given that inflation is still above their 2% target and hasn¡¯t made any meaningful progress for a year.
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