Question

President Donald Trump is attempting to gain more control over the federal reserve system policy. Trump argues that he would prefer lower interest rates so as to continue the 50-year record of low unemployment. FRS officials, by contrast, fear rising inflation and also want to gradually raise rates so as to be ready for the next downturn. Do you agree or disagree with Trump with Trumps attempt to gain more control over the federal reserve system policy. Why?

Answer 1

US economy is growing close to 3 % and it is expected to continue over the long run. President Trump is asking for support from the Federal Reserve system. Although the objectives of both government and Federal Reserve are to achieve full employment, the Fed focuses on price level as well. When the economy reaches full employment, the Fed reserve focuses only on inflation when the economy is at full employment.

Federal must be free from the control of the government. it is managed by the professional experts and its working is interfered with, there would be negative outcomes for the whole economy .Since the government is focussing on output and employment only. there will be the larger surge in the inflation rate.

Thus, Federal Reserve system must be allowed to be autonomous and independent. Its working must be guided through the long run vision.