The brand-new GOP tax law will take pressure off the Federal Reserve despite skepticism by some central bankers, the chairman of President Donald Trump’s Council of Economic Advisers said Monday.
Minutes by the Fed’s December meeting on multiple occasions noted of which officials remained unsure over just how much of a boost in activity would certainly come by the tax cuts.
Members were “quite uncertain” about the impact the tax plan would certainly have on the labor supply. There also was concern of which the tax windfall corporations would certainly get would certainly be spent on dividends in addition to share buybacks.
Fed officials have said they view gains in coming years as muted in addition to more in line with the post-financial crisis trend.
“I respect the independence of the Fed, however you know our modeling is actually the … tax cut is actually going to boost supply, of which’s going to put downward pressure on cost in addition to of which’s going to actually take pressure off the Fed,” Trump aide Kevin Hassett told CNBC’s “Squawk Box.”
He said recent announcements of minimum wage increases in addition to one-time bonuses by U.S. companies proves the tax cuts will have a positive affect.
“We’re going to get more capital formation here from the U.S.,” said Hassett, a former senior economist at the Fed. “We’ve got more than a million people getting raises of around $1,000 just because the tax bill passed a few weeks ago.”
The raises Hassett was referring to were announced by many companies from the immediate aftermath of the final GOP tax bill passing Congress.
Before his appointment, Hassett was an economist at the American Enterprise Institute. He had also been a consultant to the Treasury Department in addition to an advisor on presidential campaigns, including Republican Mitt Romney’s unsuccessful run in 2012.