0416 GMT - Incoming U.S. President Donald Trump and the Federal Open Market Committee are likely to be sparring partners in the coming years, raising the risk that inflation expectations could begin to drift higher, says Kristina Clifton, economist at CBA. Trump could take steps such as appointing FOMC members who align with his political and economic views or installing a shadow FOMC chair while increasing public criticism of interest rate decisions, she adds. Political interference in monetary policy can undermine the FOMC's credibility and independence, Clifton warns, as reduced independence may de-anchors inflation expectations. A rise in inflation expectations could result in higher inflation outcomes and lead to increased interest rates, she notes. (james.glynn@wsj.com; @JamesGlynnWSJ)
(END) Dow Jones Newswires
January 16, 2025 23:16 ET (04:16 GMT)
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