President Donald Trump says he wants the US economy to stay strong, so he wants the Federal Reserve Bank to help him by lowering interest rates.
The president has an ally in Fed Governor Stephen Miran, who also believes the Fed keeps its monetary policy too tight and would like to see a big drop in interest rates over the next few months.
"When we talk about the Federal Reserve and it's lending rate, the only rate we're talking about is the Overnight Lending Rate, says veteran economist, "Money Man" Pat Shinn.
"When we talk about mortgage rates or auto loans those are completely different since those are long-term.
"So the Federal Reserve, they lowered interest rates last year, what are they going to do this year? They meet and they have 12 voting members, one of whom is a man named Stephen Miran, he was recently added by President Trump to fill a vacant slot, but he's an advocate for lowering interest rate and lowering them a lot," Shinn explains.
"Now he's back in the news when he said he would favor a one full point decrease in the Fed Funds rate, and that was after Friday's non-farm payroll [unemployment] numbers came in weaker than expected.
"Right now, the Fed funds rate, the rate the Federal Reserve sets, it's between 3.5- and 3.75 -percent -- and inflation is somewhere between 2.7-percent and 3-percent year-over-year, that's still well above the Federal Reserve's target of 2-percent," Shinn notes.
"Now if we look at Fed funds futures, we see the markets are pricing in two rate cuts this year between now and the end of the year -- anything more or less and you run the risk of an adjustment in those stocks and bonds.
"So the Fed, they are literally walking a tightrope right now...they want to keep the economy going, they want to keep interest rates low, but if they cut rates by too much that'll actually fuel inflation and it will send long-term interest rates higher, due to fears of higher inflation while short-term interest rates go lower," he said.