Most economists surveyed suggest that the Federal Reserve should raise interest rates to control inflation, challenging the demands of Donald Trump. A 0.25% increase is anticipated at the next meeting.
A significant group of economists suggests that the Federal Reserve (Fed) must raise interest rates, facing pressures from former President Donald Trump to keep them low. According to expansion.com, a survey from the Booth School of Business at the University of Chicago reveals that 50 out of 51 economists consulted support an increase in the interest rate from 3.5% to 3.75%.
The Fed's two-day meeting starting this Wednesday is expected to conclude with a quarter-point increase. Current inflation, at 3.7%, nearly double the 2% target, has led many economists to point out that the Fed is “very behind the curve” in its response to inflation, as noted by Olivier Coibion, a professor at the University of Texas at Austin.
The rise in prices, especially in the energy sector due to geopolitical tensions, has also led economists like Alan Blinder to emphasize the need for the Fed to “prove its worth” in tackling inflation. Despite the pressures, Trump has criticized current rates, calling them “ridiculous”.
Almost 90% of respondents do not expect the Fed to reach its inflation target by 2028, raising doubts about future hikes. The decision this Wednesday will be crucial for the Fed's approach to inflation and its independence from political demands.
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