President Trump on Friday hailed the release of federal data showing low inflation as he presses the Federal Reserve to cut interest rates.
Trump praised the Friday release of the consumer price index, which rose 0.3 percent in April and 2 percent over the past 12 months. The index — minus volatile food and energy prices — increased just 0.1 percent in April and 2.1 percent over the past year, a solid and steady pace for a strong economy.
Inflation tends to rise during periods of low unemployment and strong gross domestic product (GDP) growth. The economy added 263,000 jobs in April, far exceeding expectations, while GDP grew 3.2 percent in the first three months of 2019.
But the pace of price increases have remained low throughout the past 10 years as the economy recovers from the 2008 recession.
{mosads}The Fed has sought to prevent inflation from rising beyond its 2 percent target as the economy expanded by raising interest rates nine times since 2015. The Fed’s preferred gauge of inflation — the personal consumption expenditure index minus food and energy — only rose 1.6 percent since April 2018.
Trump, Vice President Pence and top White House economic adviser Larry Kudlow have all called on the Fed to cut interest rates to boost the economy while inflation remains low.
“Our Federal Reserve has incessantly lifted interest rates, even though inflation is very low, and instituted a very big dose of quantitative tightening,” Trump tweeted last week, referring to the central bank’s efforts to cut its debt holdings.
“Yes, we are doing very well at 3.2% GDP, but with our wonderfully low inflation, we could be setting major records &, at the same time, make our National Debt start to look small!” the president said.
Fed officials say they plan to keep rates steady through 2019 barring a major shift in the economy.
“We think our monetary policy stance is in a good place and we are going to be patient,” Fed Chairman Jerome Powell said last week after the bank’s monthly monetary policy meeting.
“We don’t feel like the data is pushing us in either direction.”