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TRUMP: 'I do like a low interest rate policy, I must be honest with you'

Myles Udland
·Markets Reporter

President Donald Trump has to admit it: he likes low interest rates.

In an interview with The Wall Street Journal published on Wednesday, Trump said, contrary to some of his statements during the campaign, that he does in fact like low interest rates.

“I do like a low-interest rate policy, I must be honest with you,” Trump told the Journal.

Also running counter to some of his campaign-era rhetoric, Trump did not say that he would necessarily look to replace Federal Reserve chair Janet Yellen when her term expires next year.

Trump said that Yellen was “not toast,” and said, “I like [Yellen], I respect her… it’s very early.”

Yellen’s term as Fed Chair is set to expire on February 3, 2018, though she is set to remain as a member of the Fed’s board of governors, and a voter on the Fed’s policy-setting committee, through 2024.

Following this interview’s publication, Neil Dutta, an economist at Renaissance Macro, argued that these comments from Trump indicated Gary Cohn, a Goldman Sachs alum and the president’s chief economic advisor, is moving into the driver’s seat on Trumponomics.

“Nationalism is giving way to pragmatism,” Dutta wrote. “I think the odds of Janet Yellen being here next year are rising and I do think that is bullish for risk appetite.”

In other words, Yellen remaining as Fed chair and the Fed’s policy framework remaining consistent would be good for stocks and global financial markets more generally.

Fed Chair Janet Yellen.
Fed Chair Janet Yellen.

In September, Trump said Yellen and the Fed were “obviously political,” adding that rates were being kept low because it is what then-President Obama wanted from the central bank. Trump added that, “what they [the Fed] are doing is, I believe, it’s a false market. Money is essentially free,” according the Wall Street Journal.

In March, the Fed raised interest rates for the third time since the financial crisis, though this was the central bank’s second rate increase in just three months.

According to data from Bloomberg, traders expect the Fed will raise its benchmark interest rate one more time this year; the Fed’s forecast anticipates two more rate hikes this year.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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