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Trump, Fed Headed for Clash Amid Dollar Surge, Economists Say

Tight labor market, rising inflation will push up rates.

By Alessandro Speciale and Mark Deen, Bloomberg | Updated on January 16, 2017

Donald Trump and the U.S. Federal Reserve are heading for a collision that will almost certainly result in a stronger dollar, two leading economists said.

“I see a likelihood for a major clash developing in the next year, year and half, between the Trump administration’s desire to go for 3 to 4 percent growth and the growing attention of the Fed to emerging inflation in their own 2 percent mandate,” Northwestern University’s Robert J. Gordon told a conference in Paris Monday. Barry Eichengreen of the University of California Berkeley sees “double-digit” dollar appreciation as a possible consequence of Trump’s fiscal stimulus, tax reform and protectionist trade policy.

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