Former Fed official says bank shouldn't cut rates and risk helping Trump

The former president of the Federal Reserve of New York argued Tuesday that the central bank should withhold stimulus from economy as leverage to end President Trump’s trade war with China.

Bill Dudley, who led the New York Fed from 2009 to 2018, wrote that the bank should “refuse to play along” with Trump’s trade war by cutting interest rates and should instead allow the economy to slow and hinder the president’s odds of re-election.

But Dudley, who for a decade was the second-ranking official on the Fed’s rate-setting committee, argued that Trump’s protectionist trade policies and repeated attacks on the bank calls for a new adversarial approach.

“Trump’s reelection arguably presents a threat to the U.S. and global economy, to the Fed’s independence and its ability to achieve its employment and inflation objectives,” Dudley wrote.

“If the goal of monetary policy is to achieve the best long-term economic outcome, then Fed officials should consider how their decisions will affect the political outcome in 2020.”

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