In a segment on Squawk Box on CNBC, former World Bank President and international finance expert David Malpass criticized the Federal Reserve's (FED) high interest rates and their impact on economic growth in the US.
High Interest Rates and Economic Growth
Malpass noted that the current FED interest rates are 'still too high' and are holding back growth in the US economy.
Criticism of Jerome Powell's Statement
Malpass challenged FED Chairman Jerome Powell's assertion that Trump's tariffs had raised inflation expectations and delayed interest rate cuts. He described Powell's assessment as 'contextual but distracting' and emphasized that 'the real problem is that the FED is still keeping interest rates too high.'
Role of Tax Changes in Supporting the Working Class
Malpass also commented on Trump's proposal to eliminate the tip tax as a step in the right direction to support the working class. He refuted criticisms that the bill to extend tax cuts would add $3.3 trillion to the budget: 'These numbers are static models that assume the tax cuts are not extended and have no impact on growth.'
David Malpass emphasizes the need to rethink FED's economic models and the importance of focusing on maintaining economic growth amid a changing environment.
