Trump vows exec order to limit govt. drug costs Fed pick aligns with prez on rates
Economist favored credit-tightening in 2016
President Trump is promising an executive order that he says is intended to enable the U.S. government to pay lower prices for prescription drugs.
Trump says his administration soon would announce a “favored-nations clause,” where the amountpaidbythegovernment for a particular drug would not exceed the lowest amount paid by other nations or companies.
Prices in other countries are often lower because governments directly negotiate with manufacturers.
Trump mentioned his proposal when speaking with reporters before departing the White House for New Jersey, but he provided no other details.
WASHINGTON — Economist Judy Shelton, tapped by President Trump for a seat on the Federal Reserve board, said Friday she does not favor credit-tightening by the Federal Reserve that would harm investors.
In a CNBC interview, Shelton sought to align her past criticism of the Fed’s record-low interest rates during the Obama administration with the current attacks by Trump on Fed rate hikes.
“When you consider that over half of American households are invested in mutual funds or pension funds in this market, I don’t want the Fed to pull the rug out from under them by taking a position that is not conducive to further providing liquidity for this growing economy,” Shelton said.
Trump on Tuesday tweeted that he planned to nominate Shelton, currently the U.S. executive director at the European Bank for Reconstruction and Development, and Christopher Waller, currently the research director at the Fed’s St. Louis regional bank, to two vacant seats on the seven-member Fed board.
Both picks are being viewed as efforts by Trump to influence Fed policy to lowering rates, which Trump for a year has contended are too high.
Shelton served as an ecoMost nomic adviser to Trump’s transition team and has worked for the Atlas Network, a think tank that has been critical of the Fed’s monetary policy and has advocated a return to the gold standard, which would tie the value of the dollar to the value of gold.
economists see such a move as far-fetched in the current global economy, arguing that it would result in more and deeper recessions by limiting the Fed’s flexibility to fight downturns.
Commenting on the Fed’s drive to support the economy after the 2008 financial crisis with low rates and massive bond purchases, Shelton said in a 2016 Wall Street Journal interview that “ultralow interest rates” have “flooded wealthy investors and corporate borrowers with cheap money, while savers with ordinary bank accounts have been obliged to accept next-to-nothing returns.”
Shelton was not asked in the CNBC interview to reconcile her past opposition to low Fed rates with her support of low rates now.