In a recent interview on CNBC, former US Treasury Secretary Steven Mnuchin expressed his expectations regarding the Federal Reserve's monetary policy and the current state of the economy.
Predictions on Interest Rates
Steven Mnuchin stated that he expects the Fed to cut interest rates by 75-100 basis points over the next 12 months. He pointed out that Fed Chairman Jerome Powell is taking a 'wait-and-see' approach. According to Mnuchin, the market has already priced in this reduction and expects it to be gradual. 'I think we will see a decrease in interest rates of about 100 basis points, unless there are any surprise developments,' he added.
Impact of Tariffs on Inflation
Mnuchin noted that he expects President Trump to announce several trade deals soon. If progress is made in the negotiations, some tariff decisions made in July could be postponed. 'The tariffs that have been implemented so far have not increased inflation. This supports the market’s expectation of low interest rates,' he stated, adding that negotiations with countries such as China, India, and Japan are ongoing.
TikTok and Tax Policy Issues
Mnuchin also commented on the situation with TikTok, expressing hope that the President will reach an agreement regarding the platform. He mentioned that rather than a direct sale, a solution involving new investors becoming partners with the company is more likely. He also emphasized the importance of the 'big tax package' expected to pass the Senate, arguing that extending the Trump-era tax cuts is critical for the market.
Thus, Steven Mnuchin's assessments regarding the future changes in the FED's monetary policy, as well as the impact of tariffs and tax policy on the economy, highlight the current issues facing the U.S. economy.
