Markets are betting heavily that the man Americans last week elected as their next president will enact fiscal and other policies that will boost U.S. growth and inflation, but at least one U.S. central banker is pushing back, Reuters reports.
“There are some potential policies that would be positive for GDP; there are some potential policies that might be negative for GDP; and I don’t know which ones, nor does the country,” says Robert Kaplan, president and CEO of the Federal Reserve Bank of Dallas.
Since Republican Donald Trump was elected U.S. president last week, the 10-year Treasury yield has climbed to its highest since January, and stocks have risen to records, on expectations that Trump and a Republican Congress will legislate infrastructure spending, tax cuts and deregulation that will encourage investment and hiring.
But Trump has also embraced policies to restrict immigration, historically a key contributor to U.S. labor force growth, and jack up tariffs on trading partners including Mexico and China.
Kaplan has repeatedly called for broad economic policies that can take over from monetary policy as a main driver for U.S. growth.
He also says that trade has boosted U.S. job growth, and immigration is an important way to increase the labor force and economic output.
