David Malpass, a former World Bank president and expert at Purdue University’s School of Business and International Finance, criticized the Fed’s interest rate policy regarding the Squawk Box program, which joined CNBC.
Malpass said the Fed’s interest rates are “still too high” and are hampering the growth of the US economy.
Malpass criticized Federal Reserve Chairman Jerome Powell’s statement that Trump’s tariffs raised expectations of inflation and delayed interest rate cuts. Malpass described Powell’s assessment in Europe as “contextual but distracting,” adding, “the real problem is that the Fed still keeps interest rates high.”
Malpass said the European Central Bank prefers low growth, saying the approach is not suitable for the US.
“The whole economy cannot be implemented on the principle of “not overheating.” That’s bad for the middle class and small businesses. ”
Malpass argued that Trump’s proposal to not pay tax hints is a step in the right direction to support the working class.
The program also raised a compromise bill that would extend Trump’s tax cuts. An article by former Treasury Secretaries Robert Rubin and Larry Summers entitled “This Bill is Dangerous.” Malpus said he opposed these criticisms.
“If this law is not passed, tax increases will be made. This will have a negative impact on growth. Rubin and Summers’ proposals have been in the 1990s. The conditions today are different.”
Malpass responded to criticism that the bill would add another $3.3 trillion to its budget, as follows:
“These numbers are static models that assume that tax cuts will not be extended and will not affect growth. That’s not true. The US economy could grow much faster.”
Malpass argued that the anti-growth economy model used by the Fed must change. “Everyone in Washington is focusing on government growth, and that idea has to be over,” he said.
*This is not investment advice.
