Trump pledges passage of tax cuts after Senate OKs budget

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US President Donald Trump on Friday signaled optimism for the passage of Republicans’ sweeping tax cut plan, saying a key senator who rejected the party’s budget blueprint a day earlier would back the proposed tax measure when it comes up for a vote.

On Thursday, the Republican-controlled Senate approved the budget resolution for the 2018 fiscal year with Senator Rand Paul casting the lone Republican vote against it.

As progress on US tax reforms raised prospects of a fiscal lift to the economy, though a lack of broad inflationary pressures checked gains, the dollar rose on Friday.

That approval paves the way for their tax-cut package, which would add up to 1.5 trillion US dollars to the federal deficit over the next decade in order to pay for proposed cuts.

The dollar climbed 0.3 percent to 93.58 .DXY against a basket of currencies, its biggest daily rise since October 5.

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Investors expect a fiscal boost to push up inflation, adding pressure on the U.S. Federal Reserve to raise interest rates, known as the "Trumpflation" trade. Price pressures remain subdued in the United States despite tight labor markets with core PCE inflation.

Although analysts do not expect a rebound in price pressures, according to Reuters, with CLSA strategists saying inflation has probably peaked in this cycle, the “Trumpflation trade” could be back in play after the US Senate approved a budget blueprint that paves the way for tax cuts.

The Republican-controlled Senate voted 51 to 49 for the budget measure, making it possible for tax reforms to be pushed through without support from the Democrats.

Bets that Trump’s planned tax cuts, infrastructure spending and other pro-business measures would push up growth and inflation had been behind a “Trumpflation trade” that propelled the dollar to 14-year highs earlier this year.

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