University of Maryland economist Peter Morici warns that the biggest threat to the U.S. economy isn't overheating but overshooting if the Federal Reserve continues to hike interest rates past a certain crucial level.
Morici fears the Fed will probably raise interest rates too much.
"We can do another year of 3% [growth] if the Fed doesn't spoil it," Morici told MarketWatch.
Experts have told Reuters that a stock sell-off, rising trade tension with China, slower global growth and verbal pressure from the White House are unlikely to dent the Fed's rate hike plans in an economy performing in line with the central bank's forecasts.
Gradual rate increases - moving the overnight federal funds rate over the next year and a half or so from between 2 and 2.5 percent now to around 3.4 percent - would slow the economy a bit, but keep inflation in check during a record-setting era of recession-free growth spanning the Obama years and President Donald Trump's first term, Reuters explained.
However, Morici thinks the Fed must stop at 3 percent. "The difference between 3% and 3.4% is a lot," he said.
Morici, like President Donald Trump, has been critical of the central bank.
"It's not their business to prop up the stock market," he said. "But it's not their business to deflate it either. "Their compass is broken," he said of the Fed.
"The biggest question is, will the Fed overshoot?" the Newsmax Finance Insider said.
Meanwhile, Trump economic adviser Larry Kudlow, qualifying the president's opinion of Fed Chair Jerome Powell's central bank said he thought the central bank was "on target," and that its ability to raise rates was a sign of "economic health, that is something to be welcomed and not feared."
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