Tags: larry kudlow | fed | rates | stimulus

Kudlow to Fed: Stay Put on Rates and 'Pray for Fiscal Stimulus'

Kudlow to Fed: Stay Put on Rates and 'Pray for Fiscal Stimulus'
Janet Yellen (Getty Images)

By    |   Friday, 20 May 2016 12:42 PM


Newsmax Finance Insider and renowned economist Larry Kudlow warns that the Federal Reserve shouldn’t be tempted to hike interest rates amid the obviously struggling economy.

“My advice to the Fed: stay put and pray,” the CNBC senior contributor said. “Pray for some fiscal stimulus in the form of slashing the corporate tax rate. That's what I would do,” he told CNBC.

Kudlow said he doesn’t see any evidence of the economy actually strengthening or inflation gaining steam. Donald Trump's campaign is getting the help from Kudlow and Stephen Moore to revamp a controversial tax plan that would've likely added $10 trillion to the deficit.

“I don't see any reason why this economy is going to take off,” he said. “The dollar is flat over the year. I don't see anything that suggests inflation breakout. And that ought to be the Fed's number one criteria. Is there or is there not a big inflation wave coming?”

Kudlow also cautioned investors against hanging onto every word each “talking head” in the central bank warbles.

While policy makers have repeatedly said that the June Fed meeting is on the table, markets were barely pricing in a move until a volley of speeches and the release of the Fed’s April meeting minutes earlier this week.

"I don't think the Fed has any real long lasting power over the real economy,” Kudlow explained. “You got a lot of mouths. You have a lot of noises. You have a lot of babble going on inside the Fed,” he said. He advised only listening to the two top central bank officials. “I would rather hear what, if anything, Stanley Fischer says or Janet Yellen says.”

The Fed has long considered its June meeting as a possible time to raise interest rates, and investors have the odds of a move priced about right, Princeton University economist Alan Blinder said.

“The markets have it maybe roughly right,” even though he’s a “little skeptical” it’ll happen in June given the uncertainty around the U.K. referendum to leave the European Union several days later, said Blinder, a former Fed vice chairman, on Bloomberg Radio with Tom Keene and Michael McKee, noting that markets see about a 30 percent probability of a rate hike next month.

The Federal Open Market Committee meets in Washington on June 14-15 and will discuss whether the economy can handle an increase, the second since they lifted the fed funds rate in December 2015. The British vote takes place on June 23.

“I don’t think it was an about-face,” Blinder said of the messaging this week. “The markets foreclosed it a long time ago, now they’ve reopened it. I don’t think it’s much of a change on the part of the Fed.”

(Newsmax wire services contributed to this report).

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
Newsmax Finance Insider and renowned economist Larry Kudlow warns that the Federal Reserve shouldn't be tempted to hike interest rates amid the obviously struggling economy.
larry kudlow, fed, rates, stimulus
462
2016-42-20
Friday, 20 May 2016 12:42 PM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved