U.S. Vice President Mike Pence said on Friday the Federal Reserve should consider cutting interest rates given the absence of inflation in the economy, joining President Donald Trump and Larry Kudlow, Trump's top economic adviser, in pressuring the central bank on monetary policy.
"There's no inflation; the economy is roaring," Pence said in an interview with CNBC. "This is exactly the time, not only to not raise interest rates, but we ought to consider cutting them."
Pence made the remarks after the government released a report showing strong job growth last month and a drop in the unemployment rate to a more than 49-year low of 3.6 percent -- a performance he credited to the Trump administration's tax- and regulatory-cutting policies.
The independent central bank, whose policymakers pride themselves on standing above politics, held interest rates steady at a two-day meeting that wrapped up on Wednesday and signaled little appetite to adjust them any time soon.
Trump and the head of the White House National Economic Council, Larry Kudlow, have been calling for rate cuts from the Fed for weeks.
On Tuesday, Trump suggested in a tweet that the Fed should lower rates by a hefty one percentage point and buy bonds to drive borrowing costs lower. "We have the potential to go ... up like a rocket if we did some lowering of rates, like one point, and some quantitative easing," he wrote on Twitter.
The Fed normally moves in just quarter-point increments.
In an interview with Fox Business Network on Friday, Kudlow said he thought the Fed was mulling a rate reduction.
"With these low inflation numbers, I think the Fed is actually looking at rate cuts," he said. "Our views right now intellectually are not really far apart from the Federal Reserve, best I can determine."
In other media appearances Friday, Kudlow said:
- The United States may finalize a trade agreement with Japan by month's end. Kudlow spoke after President Donald Trump's recent on-on-one meeting with Japanese Prime Minister Shinzo Abe. Trump, who hosted Abe at the White House in April, had said he hoped to clinch a final deal with Japan in time for his visit to Tokyo later this month. Kudlow, speaking to reporters at the White House, did not give any further details about the possible deal with the U.S. ally. The negotiations are part of the Trump administration's efforts to make good on the president's call for better trade agreements with its top trading partners - Japan, China and the European Union. U.S. Secretary of Agriculture Sonny Perdue earlier this week said U.S. officials may seek a quick, narrow pact with Japan. Japan invited Trump to visit May 25 to May 28.
- The White House will work on stronger enforcement mechanisms for its replacement NAFTA trade deal in response to requests from House Democrats. The Trump administration is pushing Congress to pass the new United States-Mexico-Canada Agreement (USMCA), which would replace the 25-year-old North American Free Trade Agreement. Democrats, who control the House of Representatives, have said the trade agreement must address concerns over enforcement. On Thursday the House’s top Democrat, Speaker Nancy Pelosi, told reporters that the deal must include the enforcement provisions in the bill itself and not as side legislation. Democratic lawmakers also insisted that Mexico must protect labor rights. On Monday, the Mexican Senate approved a reform that enshrines the right of Mexican workers to organize and grants them more control over their contracts.
- Kudlow said that he did not favor a higher federal tax on gasoline to fund an infrastructure program, but if states wanted to raise their own gas taxes, that was up to them. Kudlow made the comments to reporters outside the White House. Kudlow has said previously that President Donald Trump had not decided yet whether to support a fuel tax increase to pay for the package. Trump met with top Democratic lawmakers earlier this week and agreed to pursue a $2 trillion infrastructure package. The group is slated to meet again in roughly three weeks to discuss how to fund the effort.
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