Trump is right to critique the Federal Reserve, but his attacks are in the wrong direction

The US Federal Funds rate is the measure which determines interest rates across the US economy – and is therefore a very important tool in economic policy-making. Traditionally, the Federal Reserve has complete independence in determining its policies in this area, but President Trump has undermined this principle with recent comments that the Fed should be more Dovish. Michael Ellington and Costas Milas analyse the recent history of the Federal Funds rate and find that it has actually been too low to stave off inflationary pressures in the economy. They argue that Trump is right to criticize the Federal Reserve – but that his critiques are in the wrong direction.