WASHINGTON, April 26 (Xinhua) -- Larry Kudlow, the director of the White House National Economic Council, said Friday that the U.S. Federal Reserve should cut interest rates to stimulate economic development despite a seemingly strong first quarter growth number.
Calling the 3.2 percent annual growth rate of real gross domestic product (GDP) "a blow out," Kudlow told CNBC that the current economy is in a "prosperity cycle" that is "gaining momentum."
He said, however, the inflation rate continues to slip "lower and lower," adding that even by the Fed's own measure, the personal consumption expenditures (PCE) deflator for inflation has dropped during the past few months, which "could open the door to a target rate reduction."
The Fed's preferred inflation measure, core PCE price index, which excludes the volatile food and energy prices, rose at a 1.3 percent rate in the first quarter, down from the central bank's 2 percent inflation target, according to the GDP report just released by the Commerce Department.
Kudlow has repeatedly urged the Fed to cut interest rates since it decided to maintain the target range for the federal funds rate at 2.25 percent to 2.5 percent after concluding a policy meeting in March.
Addressing a press conference last month, Fed Chairman Jerome Powell said the policymaking Federal Open Market Committee believes that the central bank "should be patient" in assessing the need for any change in the stance of policy.
"The Fed is independent. I am just expressing my own view," the White House economic advisor said, adding that the president agrees with his view.
The 3.2 percent annual growth rate for the first quarter indicated an acceleration of economic expansion from a downwardly revised annual rate of 2.2 percent in the fourth quarter of 2018, the report showed.
The pickup is mostly driven by strong exports and private inventory investment, while growth in consumer spending and nonresidential fixed investment has softened.
In its latest economic projections, the Fed cut its forecast of the U.S. economic growth in 2019 and 2020, expecting a rate of 2.1 percent and 1.9 percent, respectively.
