Trump's High Interest Rate Obstacle

Bloomberg's Jamie Rush, Stephanie Flanders and Tom Orlik are out with a new book: 'The Price of Money: A Guide to the Past, Present and Future of the Natural Rate of Interest,' a collection of essays by the Bloomberg Economics team. Orlik joins Balance of Power to discuss the hurdles US President Donald Trump faces getting lower interest rates.

Federal Reserve Bank of St. Louis President Alberto Musalem said he supported last week’s decision by policymakers to leave interest rates steady, adding the US central bank is still missing more on the inflation side of its mandate.

“The economy is such that we are missing on our inflation target,” Musalem said Friday during an event in Itta Bena, Mississippi. “We are not missing on our employment mandate. The labor market seems to be around full employment.”

Fed officials left their benchmark rate steady last week at a target range of 4.25% to 4.5%, where it has been since December. Most policymakers have said they want more time to see how tariffs will affect inflation and growth. But two Fed governors voted against the move, citing worries about a slowing labor market. A weaker-than-expected jobs report released Friday added credibility to those concerns.

The US unemployment rate ticked up to 4.2% in July and employment growth averaged just 35,000 over the past three months.

“The labor market is balanced in terms of supply and demand,” said Musalem. “But supply and demand are both declining at the same time, or have cooled at the same time.”

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