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Question 1 (a) The US Federal Funds rate is the measure which determines interest rates across the US economy - and is therefore a very
Question 1 (a) The US Federal Funds rate is the measure which determines interest rates across the US economy - and is therefore a very important tool in economic policy-making. Traditionally, the Federal Reserve has complete independence in determining its policies in this area, but in 2018 President Trump suggested that the Federal Reserve should be more dovish. In an interview with The Wall Street Journal, President Trump also noted I'm very unhappy with the Fed because Obama had zero interest rates". Trump's criticism should be put in an economic context. Personal consumption expenditures inflation, at 2.2% per annum in 2018Q3, was just above the Fed's 2% target and real GDP growth of 3.5% per annum in 2018Q3 was above the 3.2% average growth rate of the post-World War II period. Assess Trump's comments with reference to the arguments put forward by Michael Ellington and Costas Milas in an opinion piece published in 2018 by The London School of Economics American Politics and Policy blog. (30 Marks) Question 1 (a) The US Federal Funds rate is the measure which determines interest rates across the US economy - and is therefore a very important tool in economic policy-making. Traditionally, the Federal Reserve has complete independence in determining its policies in this area, but in 2018 President Trump suggested that the Federal Reserve should be more dovish. In an interview with The Wall Street Journal, President Trump also noted I'm very unhappy with the Fed because Obama had zero interest rates". Trump's criticism should be put in an economic context. Personal consumption expenditures inflation, at 2.2% per annum in 2018Q3, was just above the Fed's 2% target and real GDP growth of 3.5% per annum in 2018Q3 was above the 3.2% average growth rate of the post-World War II period. Assess Trump's comments with reference to the arguments put forward by Michael Ellington and Costas Milas in an opinion piece published in 2018 by The London School of Economics American Politics and Policy blog. (30 Marks)
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