Fed’s flexibility on mandates might be tested in Trump era

n two weeks, President Trump is expected to unveil his budget proposal. The Fed is watching for more government borrowing that doesn’t add to sustainable economic growth.

The Trump economic era may be under way, but as far as the Federal Reserve is concerned, it’s steady as she goes in the week ahead. Beyond this week, though, things may not be as certain.

The central bank’s policymakers aren’t shy about changing tactics to work toward their two mandates of stable prices and maximum employment. That flexibility could be tested now.

In the week ahead, the Fed meets for the first time since raising the short-term interest rate in December. It is doubtful the bank will hike its interest rate. However, with fiscal uncertainty growing, it will be more than a bit interesting to see how the Fed characterizes its outlook.

In two weeks,…

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