Former World Bank Chief Blames Fed for Stalling U.S. Economy
David Malpass, former World Bank chief and seasoned expert in international finance, has issued a sharp critique of the Federal Reserve’s current monetary stance, arguing that persistently high interest rates are throttling U.S. economic growth.
During an appearance on CNBC’s Squawk Box, Malpass dismissed recent remarks from Fed Chair Jerome Powell that tied inflation expectations to Trump-era tariffs. Rather than focusing on geopolitical blame, Malpass said, the real problem lies in the Fed’s reluctance to ease monetary policy despite signs of slowing growth.
“We’re stuck in a mindset that fears overheating more than stagnation,” Malpass said, criticizing both the Fed and European Central Bank for fostering low-growth environments. “That logic harms small businesses and middle-income families the most.”
Turning to fiscal policy, Malpass backed Trump’s proposal to exempt tips from taxation, calling it a practical step toward supporting lower-income workers. He also defended a new tax bill that seeks to extend Trump’s earlier tax cuts, rejecting claims that it would inflate the deficit by $3.3 trillion.
“Static models don’t account for how pro-growth policies can expand the economy,” he said, pushing back against recent criticism by former Treasury Secretaries Robert Rubin and Larry Summers. “They’re using frameworks from the 1990s that don’t reflect today’s dynamics.”
Malpass ended with a broader warning about the direction of U.S. policy: “Washington needs to shift its focus away from growing bureaucracy and toward growing opportunity. That’s where real prosperity lies.”
Alexander Stefanov
Reporter at Coindoo
Alex is an experienced financial journalist and cryptocurrency enthusiast. With over 8 years of experience covering the crypto, blockchain, and fintech industries, he is well-versed in the complex and ever-evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His approach allows him to break down complex ideas into accessible and in-depth content. Follow his publications to stay up to date with the most important trends and topics.
