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U.S. Commerce Secretary Wilbur Ross said the Federal Reserve's December interest-rate increase was “at best premature” and urged the central bank to reconsider whether that move was necessary because it was based on faulty assumptions about inflation.
“Where most economists have been wrong, particularly the Federal Reserve staff economists have been wrong, is they have been believers in the idea that as unemployment goes down, inherently inflation will become a problem,” he said in an interview Wednesday on Bloomberg Television.
“They have been simply wrong in that thesis” and “that has led the Fed to be more aggressive in interest rates than the facts really warranted,” he said. “We really don't have inflation” and “nobody thinks we're in runaway inflation right now,” he said.
The latest evidence of tame U.S. price pressures despite the lowest jobless rate in 49 years appeared on Wednesday. A report from the Labor Department showed that the core consumer price index, which excludes energy and food costs, rose 2% from a year earlier, below forecasts.
With the Federal Open Market Committee scheduled to meet next week, Ross added his voice to the list of Trump administration officials who don't abide by a longstanding White House tenet of avoiding public comment on monetary policy out of respect for central bank independence.
“The Fed taking a more cautious attitude on rates and reconsidering, in effect, the last rate increase that they put in -- I think that's good,” he said. “I think they should reconsider. I think it's quite likely that that last increase was at best premature.”
To contact the reporter on this story: Brendan Murray in Washington at brmurray@bloomberg.net
To contact the editors responsible for this story: Alister Bull at abull7@bloomberg.net, Matthew Boesler
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