Breitbart economics editor John Carney said there is nothing in the latest economic data to justify the Fed cutting rates after its March meeting. Said FOX Business host Larry Kudlow said in an interview Wednesday.
Kudlow said economic data clearly shows that central bank tightening is not slowing inflation, so the move by Fed officials to lower rates appears to be motivated by political rather than economic considerations. He pointed out that it looked like.
“It's a very cynical and very corrupt idea for the Federal Reserve, which is supposed to be independent, to do anything other than stimulate the economy to re-elect Joe Biden, but at this point… “There is no reason to reduce the interest rate period,” he added. There is no such thing as a recession. The unemployment rate will not skyrocket. Inflation is well above target. ”
Governor Carney agreed: “At this point, there is no trigger for a rate cut.'' “That would be a full option rate reduction, but I think it actually takes that option away from them. If you look at this retail sales report, remember what retail sales are? . There's a lot of inflation. It's the sale of goods. That was supposed to be the cause of the current disinflation, but people bought up goods.”
“If you look at the import prices, prices should have come down because the inflation of goods should have been eliminated now,” he continued. it's not. It was flat in December, which means there will be more inflation than people expect. ”
Carney also mentioned other inflationary factors affecting the global economy, such as shipping issues in the Red Sea.
“I'm not really worried about what China will do to global inflation. I'm worried about the Red Sea because we're about to have massive supply constraints around the world,” he said. Told.
“Let's just say the transit time increases by 20% because the ship goes around Africa,” Carney added. “Guess what? That's the equivalent of one in five ships being canceled out of the total ship supply. That would undermine global supply as demand for goods increases. What's that? Do you think that's equivalent, Larry? More inflation. The Fed can't honestly cut rates at this point.”
Carney believes Fed Chairman Jerome Powell will follow the advice given by Fed Director Christopher Waller in his Monday speech, but Waller insisted the Fed is in no rush to cut rates right now.
As Carney wrote in Monday's article, Breitbart Business Digest:
Waller argues that Soft landing means the Fed can wait to cut rates.
…
This is a point we have made many times. If we're headed for a soft landing, There is no trigger for a rate cut early this year.. There's nothing forcing the Fed to cut rates quickly or often. A more prudent approach would be to see how the economy develops this year before implementing the first rate cut, and then see how it reacts to that rate cut before acting again.
“Actually, I think [Powell is] “We're going to take the stance that Chris Waller expressed in his speech that there's no need to rush into cuts,” Carney told Kudlow. “There is no recession to avoid. Usually when the Fed switches to cutting rates, it does so in very rapid succession because it is fighting an economic downturn. That is not the case right now. There is no need to rush. . They can stay put.”
“Waller told us,” he continued. “And Waller is very convincing because he's one of the smartest guys they've got. So Powell will listen to him.”
Rebecca Mansour is a senior editor at Breitbart News. Follow her on X @Ramsour.
