This article discusses President Trump's disappointment with the Federal Reserve's economic policies. Traditionally, presidents have respected the Federal Reserve's independence from politics, but President Trump has been vocal about their actions throughout his presidency. He is now calling on the Fed to lower interest rates in order to stimulate growth in the economy. According to him, the increases in interest rates have slowed down the economy. President Trump previously issued a $1.5 trillion tax cut, a move he hoped would give the economy a lift. The effects of the cut have been waning, however, and according to this article, President Trump's trade war has started having negative effects for American companies. In addition to cutting interest rates, President Trump has called on the Fed to start buying Treasury bonds. This policy, known as qualitative easing, is another way in which he believes the Fed can stimulate economic growth.
In this block we discussed the international monetary system and the different factors that affect monetary policy. In the sectoral model, there are four domestic interest groups which are affected by these policies: import-competing industries, export-oriented industries, non-traded goods industries, and financial services. No matter what type of exchange rate or strength of currency is employed, there will always be winners and losers among American industries. For this article to claim that Trump's trade war has been having negative effects on American companies is to see this issue from only one side. Also, according to Keyne's logic for government influence over the economy, increasing interest rates has the same effect on the economy as decreasing the tax rate. Therefor, lowering the interest rate, as President Trump proposes, would have the opposite effect of lowering taxes as he had previously authorized. It will be interesting to see how the Fed responds to President Trump's demands in the near future.