The current slide in the stock market is “basically the Federal Reserve’s problem” after Chairman Jay Powell raised interest rates after he started his post, White House trade adviser Peter Navarro said Wednesday.
“[Tuesday] we had a big bump up on the market on President [Donald] Trump’s Christmas present to the nation, his announcement on tariffs,” Navarro told Fox News’ “America’s Newsroom.” “[Wednesday], before the market opened, they had what’s called a mild yield curve inversion, which means a long-term bond rate fell below the short-term rate.”
“This is basically the Federal Reserve’s problem – volatility,” he said. “They are causing this because when Jay Powell got in as chairman he proceeded to raise interest rates by 100 basis points, too far too fast. And even though the Trump economy is rock solid, it slowed us down a bit because of those higher interest rates.”
He added he has written books on what the inverted yield curve means, and now there is not an inversion, but “what we have is a flat yield curve,” which is good news in the sense it will give the Fed more reason to immediately lower interest rates by 50 basis points and another 25 points before the holidays.
“This is what everybody on Wall Street, except the Fed, believes should be happening now,” Navarro said. “The underlying fundamentals of the U.S. economy is solid as a rock. All we need to do is get the Fed basically to give the right interest rate policy. The problem we have here is our interest rates are significantly higher than the rest of the world.”
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