Trump publicly stated that if he wins the election, he will continue to support the work of Federal Reserve Chairman Powell, and said that he will not seek the possibility of removing Powell. At the same time, he also recognized the work of the Federal Reserve led by Powell. This is related to the independence of the Federal Reserve that Powell has mentioned many times in his recent two-week speeches. However, while recognizing Powell, it also brought new "troubles" to Powell. Trump's future economic strategy after taking office can be summarized in two words: "low interest rates" and "low taxes". Low interest rates are easy to understand. Accelerating interest rate cuts or increasing the frequency of interest rate cuts will reduce interest rates in a short period of time. Low taxes will be more friendly to all walks of life in the United States, but it will also cause more troublesome problems. The first question is, the liquidity shock brought by low interest rates will inevitably cause inflation to rebound in the short term. Is Powell confident that he can control this inflation rebound? If it is expected that Trump will be competent and promote his "economics", then is Powell confident about the current rate of inflation reduction? If not, will he change the expectation of interest rate cuts in September?
The second question is,
Low taxes will indeed bring better development and recovery to enterprises and the economy, but if government spending continues, the reduction in taxes means a reduction in government fiscal revenue, and support remains unchanged. The reduction in revenue is tantamount to expanding the fiscal deficit. The current fiscal deficit in the United States is still a huge "thunder", and this has triggered a series of hidden economic and financial crises. Is Powell confident that he can control it?
At present, although Trump recognizes Powell's Federal Reserve and work ability, Powell may be more worried about Trump's future work troubles. In theory, Trump will not seek the opportunity to remove Powell, and it is also very likely that he is ready to throw the problem to Powell, waiting for Powell to retreat or resign after causing problems?
As for whether Powell has confidence, it depends on whether the interest rate cut will be implemented in September!
