GILLIAN TETT: Trump holds little sway over Powell in Fed fight
Despite the rate cut on Wednesday, the battle between the Federal Reserve chair and the president will probably get worse, not better, in the coming year
Economists from Duke University and London Business School recently published research into a once-unthinkable — but now timely — question: how much market effect does a presidential Twitter attack on the US Federal Reserve actually have?
The answer offers reasons for hope, and fear. On the upbeat side, the tangible market effect of Donald Trump’s demands for looser monetary policy have been modest so far, the research suggests; the implied yield on Fed Funds futures contracts apparently declined by an average of 0.30 basis points after each attack, producing “the cumulative effect of about negative 10 bps” so far. This is so small in the wider scheme of things that it would undoubtedly disappoint Trump in the (unlikely) event he read this research.