Washington, D.C. — After meeting for the last two days, members of the Federal Open Market Committee, or FOMC, announced a decision today to leave interest rates unchanged. Michael Madowitz, Economist at the Center for American Progress, released the following statement:
The FOMC’s decision to keep interest rates steady at this time is consistent with current economic performance. The economy continues to grow at a moderate pace, and the labor market is strengthening as we pull more people off the sidelines to grow the labor force. While we’re finally seeing some wage growth, the kind of catch-up wage growth we should have experienced by this point in a recovery is still in the future. A do-no-harm approach to the economy would continue to broadly raise wages.
But the Trump administration’s erratic approach to policymaking is likely to present the Fed with an increasingly difficult policy environment in the future. Their plan for large tax cuts for the wealthy will have little positive effect on output or employment. Whether you call it “dynamic scoring” or “supply side economics,” history shows that voodoo economics is just that. But the increase in deficit and debt will diminish the government’s ability perform its legitimate functions, including responding to a severe downturn with fiscal policy. That will leave the burden of countercyclical policy squarely with the Fed at a time when interest rates are not that far from the zero lower bound. That is enough to keep a central banker up at night.
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