The U.S. economy appears to be healthy, with inflation near the Fed's target annual rate of 2% and job growth remaining strong. But economists and financial experts can't seem to reach any consensus on where things are going or what the Federal Reserve should do next. President Donald Trump has been consistent, calling on the Fed to lower interest rates. After the Fed held interest rates steady this week for the fourth straight meeting, Trump ripped Fed Chair Jerome Powell and said the failure to cut rates is costing the U.S. hundreds of billions of dollars.
For his part, Powell says the Fed is standing pat because of ongoing uncertainty about the impact of tariffs and how they could impact inflation moving forward. Meanwhile, one of the biggest names in finance disagrees with both Trump and Powell. Noted economist Peter Schiff tells Fox Business that the economy is headed for disaster, and that Fed policy is what caused it. Schiff claims the Fed's easy money policy and low interest rates that lasted for years before and during the pandemic is what led to runaway inflation. He argues the Fed should keep rates higher to keep inflation in check, even if that means tanking the economy.
Richard Rosso, Houston-based financial planner, is somewhere between Trump and Schiff, while scratching his head at Powell. Rosso doesn't think we're headed for disaster like Schiff, but he does believe inflation is still a concern...because of Trump bringing American jobs back. "The more domestic workers you hire and the less immigrants you hire, the more pay goes up---that's inflationary," says Rosso. "And that's probably more of a risk moving forward than tariffs, because tariffs are not actually getting through to the consumer."
As for what the Fed should do, Rosso says Powell and Co. appear to be stuck in a tough spot...but they have no one but themselves to blame. "The Fed didn't cause inflation, inflation was from all the fiscal stimulus that we flooded the system with," he tells KTRH. "The problem was the Fed did nothing about it...they waited and waited and told us it was transitory."
"If you'll notice, the pace of the Fed is always behind, and it's always late."
Photo: Moment RF