If President Donald Trump is serious about being a “low-interest rate guy”, markets are probably right to brush off John Taylor’s chances of being nominated for Fed Chair. That said, we don’t agree with recent claims that Taylor could prove to be dovish because he would be more inclined to believe that tax cuts will boost the economy’s supply side and therefore not be inflationary. If he believes potential growth is higher, he must also believe that the neutral interest rate is higher too.
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