Federal Reserve Chairwoman Janet Yellen downplayed the impact of Donald Trump’s presidential victory on the central bank’s plans Wednesday, suggesting that she and other Fed officials are not yet factoring in the possibilities of tax cuts or infrastructure spending into their analysis.
Asked at a press conference if the Fed’s move to raise rates more quickly next year was driven by the possibility that the president-elect would ramp up fiscal policy, Yellen mostly disagreed.
“The shifts that you see here are really very tiny,” Yellen said of the changes in the Fed’s projections, which factored in three rate hikes in 2017, rather than the two previously projected.
A number of factors went into the officials’ projections for more interest rate increases, Yellen said. She did acknowledge, however, that some members might have had Trump in mind.
“Some participants, but not all, did incorporate some assumptions of a change in fiscal policy into their projections,” she noted.
Following Trump’s surprise victory in November, stocks rose to new records and yields on U.S. government securities soared, a development that many investors attributed to his campaign promises that indicated he would cut taxes and increase federal debt.
