Fed Must Cut Interest Rates Despite Strong 3.2% GDP Growth

Fed Must Cut Interest Rates Despite Strong 3.2% GDP Growth

FLASH: White House economic advisor Larry Kudlow says the Fed should still cut interest rates despite strong economic growth in Q-1.

The government said GDP, expanded by 3.2% in Q-1 of this year, which the veteran financial guru and former Ronald Reagan adviser called “a blow out number.”

“The inflation rate continues to slip lower and lower,” Mr. Kudlow said on TV..

He said the current economy is in a “prosperity cycle” that “is gaining momentum, not losing momentum.”

“The inflation rate continues to slip lower and lower,” Mr. Kudlow, who served as The Trump Campaign’s senior economic adviser said.

“Even according to the Fed’s own spokespeople, from the chairman on down, that could open the door to a target rate reduction,” he added.

Mr. Kudlow, the director of President Donald Trump’s National Economic Council, said the argument for cutting interest rates was coming by the Fed’s own metrics.

“We are clicking on all cylinders, the inflation rate is coming down, the Federal Reserve will be looking at that,” he said.

Mr. Kudlow spoke just after the government said US economic growth accelerated in Q-1, but the burst in growth was driven by a smaller trade deficit and the largest accumulation of unsold merchandise since Y 2015, temporary boosters that are seen weighing on the economy later this year, Reuters reported.

The rise in growth reported by the Commerce Department Friday put to rest fears of a recession, that were stoked by a brief inversion of the US Treasury yield curve in March.

GDP increased at a 3.2% annualized rate in Q-1, the government said in its advance GDP report. Growth was also driven by increased investment in roads by local and state governments.

The Trump Policies are working.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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