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US-CHINA-TRADE-BANK
White House advisor calls for Fed to cut rates aggressively
WASHINGTON, Aug 7, 2019 (BSS/AFP) – White House trade advisor Peter
Navarro said Tuesday the Federal Reserve should cut interest rates
aggressively to be more in line with other economies.
Navarro accused the Fed of raising too fast last year and despite a rate
cut last week of 25 basis points called for more.
“The Federal Reserve before the end of the year has to lower interest
rates by at least another 75 basis points, or 100 basis points, to bring
interest rates here in line with the rest of the world,” he said on Fox News.
He said there was “just too big of a spread” between US interest rates and
other countries “and that costs us jobs.”
Although Navarro also said “the economy is solid as a rock,” the Fed,
which raised the benchmark lending rate a full point in four increases last
year, moved “too far, too fast, and that rate hike has cost us growth
points.”
“Everybody agrees on that. Everybody thinks that they should lower the
rates.”
Navarro, a hardliner on trade and China, said the rate increases suppress
US exports by making the US dollar stronger.
Meanwhile, Beijing has responded to US tariffs and “manipulates the
currency by intervening in the foreign exchange markets,” Navarro said.
However, economists say a weaker exchange rate is the usual reaction to a
negative hit to a country’s economy or exports, which could partly explain
the fall in the yuan.
But the US Treasury took the unusual step of naming China a currency
manipulator — something it refrained from doing even at times when the
Chinese government was actively intervening to keep the yuan weak.
China’s exchange rate broke through the psychological barrier of 7 to the
US dollar this week, angering President Donald Trump.
Navarro said the immediate US response prompted China to reverse course.
He said “as soon as the president was firm, the Chinese announced about
they are stabilizing” the exchange rate.
BSS/AFP/HR/1015