“With these low inflation numbers, I think the Fed is actually looking at rate cuts, I mean some of which were priced into the market maybe up until a few days ago,” he told FOX Business’ Stuart Varney.
Last week President Trump called for the Fed to lower interest rates, during the FOMC’s two-day policy meeting. He has been an outspoken critic of not only the Fed, but its chairman, Jerome Powell, for allegedly deterring economic growth. But Kudlow said the White Houses’ views “intellectually are not really far apart from the Federal Reserve” right now.
“The Fed is independent I’m not going to outguess their timing. They are going to do what they want to do on their own time,” he said.
“What I’ll say is, again, using the analysis, what we found is that all these incentives in the economy, creating strong growth in jobs, with no inflation, and the Fed is looking at the inflation numbers and I don’t think they are inclined to fine tune real GDP. I think they are inclined to think, think low inflation might suggest the need for lower interest rates,” he added.
Kudlow said there is a good chance the U.S. economy could get 4 percent growth and below 3.6 percent unemployment at some point this year.