Conservative economics writer Stephen Moore, who has been advocating for the Federal Reserve to cut interest rates, told CNBC on Friday that he would feel vindicated if central bankers were to go down that path.
“We could call that ‘Moore’s revenge'” if the Fed ends up cutting rates, said Moore, who earlier this month under pressure withdrew his name from consideration by President Donald Trump for a nomination to the Federal Reserve board.
Moore, a proponent of easier monetary policy, believes the Fed should not be worried about stronger economic growth causing out-of-control inflation. “This is what my whole [Fed] campaign was about — that growth does not cause inflation.”
On “Squawk Box, ” Moore said the Fed’s quarter-point rate hike in December — the fourth such move of 2018 and at a time when markets were collapsing — was “unnecessary,” arguing that policymakers ought to reverse that decision.
Trump last month, in his most brazen attack yet on the central bank, called for a 1 percentage point rate reduction and money-printing quantitative easing. The president has expressed concerns that higher borrowing costs and balance sheet roll-offs could hurt economic growth, which he views, along with the stock market, as a benchmark of success for his fiscal policies.
Calls for a rate cut, which the markets seem to think is more and more likely as the Fed’s next move, come even as first-quarter growth came in at a robust 3.2%. Traditional monetary theory holds that stronger economic growth can stoke inflation, leading historically to the Fed increasing rates to hold price pressures at bay.
At the beginning of May, the Fed voted to hold rates steady. Fed Chairman Jerome Powell, at his post-meeting news conference, appeared to put cold water on a rate cut, calling the factors that drove inflation lower “transient.”
On the escalating U.S.-China trade war, Moore contended “tariffs are taxes” and questioned whether the president should have the power to implement tariffs.
With trade talks stalling, the Trump administration last week increased duties on $200 billion worth of Chinese products from 10% to 25%. China on Monday retaliated with tariff hikes on U.S. goods. Then, on Wednesday, the president declared a national emergency over threats against U.S. technology, effectively blacklisting Chinese telecom giant Huawei from doing business with American firms.
“I don’t think that the Fed is going to be able to counteract” the impacts of the U.S.-China trade dispute by cutting rates, Moore said.