Question

Public disagreements between Fed Chair Jerome Powel and President Trump could potentially

a.damage Fed ability to manage market confidence

b.cause unexpected, random inflation increases

c.lead to unexpected economic growth

d.all of the above

Answer 1

Public disagreements between Fed Chair Jerome Powel and President Trump could potentially

d. all of the above.

Powell is one of the members of the Fed Board of Governors and one of the active policy makers. All the members of the Fed Board continuously trying to make a policy that will support maximum employment and stable price.

Trump is not happy with Powell because according to him Powell has raised the interest rates unnecessarily, there is no logic behind it. But as per the opinion of the market observers and Fed members there is a reason behind the increased interest rate. Economic growth is on its pace and unemployment is low. So the Fed is raising rates gradually to prevent overheating and inflation.

But if there is a disagreement between Fed Chair and President, it could potentially

damage Fed ability to manage market confidence

cause unexpected, random inflation increases

lead to unexpected economic growth

If the interest rate will not be checked by the Fed members then it may cause unexpected increase in inflation rate and unexpected economic growth.