Some Fed officials are already pressing for the Fed to raise the rate into restrictive territory, arguing that inflation is likely to rise if the central bank does not begin to step on the brakes. A smaller number of officials, however, argue the Fed is moving too quickly. Wage growth is just beginning to increase, raising concerns the Fed will slow the economy as workers are starting to reap real benefits.
Jerome H. Powell, the Fed’s chairman, has said that there is no need to make a judgment until next year.
Mr. Powell has described the Fed’s task as a balancing act. On the one hand, he wants to raise rates to keep inflation in check. On the other hand, he is not trying to slow economic growth — at least not yet.
The Trump Effect
Against this balancing act, President Trump has repeatedly attacked the Federal Reserve for raising interest rates too quickly, describing the central bank as “crazy,” “loco,” “going wild” and “out of control.”
Mr. Trump’s stated concern is that higher rates will slow economic growth. He also has expressed concern that higher rates will increase the federal government’s borrowing costs.
“Every time we do something great, he raises the interest rates,” Mr. Trump complained to The Wall Street Journal, adding that his handpicked chairman, Mr. Powell, “almost looks like he’s happy” to be raising rates.
So far, there is no sign that Mr. Trump’s complaints will alter the course of policy. Members of Congress, including some Republicans, have defended the Fed’s independence. And Fed officials have insisted they plan to make policy without regard to the president’s views. “Political pressure will be in no way a consideration in monetary policy decisions,” Richard Clarida, the Fed’s newly confirmed vice chairman, said last month.