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The Threat of Trumpflation and a Fed War

If inflation hawks are serious about price stability and the long-term economic outlook, they should consider what would happen if Donald Trump returned to the White House. The presumptive Republican presidential nominee has made his inflationary, financially destabilizing intentions all too clear.

BERKELEY – Inflation in the United States is lower than it was a year ago, and substantial economic weakness elsewhere is driving other central banks toward interest-rate cuts. With little empirical basis to believe that US monetary policy is not restrictive, I continue to believe that in 18 months, the US Federal Reserve will have wished that it had started cutting rates in January 2024.