The one question everyone was waiting for at today’s Yellen presser, namely the accusation by Donald Trump that the Fed is keeping rates low to prevent a market crash and make Hillary’s reelection easier, came moments ago from the WSJ’s Jon Hilsenrath who said “Donald Trump has charged that the feds are keeping interest rates intentionally low for the Obama administration.”
Her response:
“Well, I think Congress very wisely established the Federal Reserve is an independent agency. In order to insulate monetary policy from short-term political pressures and I can say, emphatically that partisan politics plays no role in our decisions about the appropriate stance of monetary policy. We are trying to decide what the best policy is to foster price stability and maximum employment and to manage the variety of risks that we see is affecting the outlook. We do not discuss politics at our meetings and we do not take politics into account in our decisions. As I said, we’re generally pleased with the progress of the economy and the decision not to raise rates today and to wait for some further evidence, we’re continuing on this course, is largely based on the judgment that we’re not seeing evidence that the economy is overheating and that we are seeing evidence that people are being drawn in in larger numbers that at least I would have expected into the labor market, and that that’s healthy to continue. But that nevertheless, we do need to be forward-looking and if we continue along this course, it likely will be appropriate to raise the federal funds rate.”
Putting it another way, as the FOMC statement inexplicably stated:
“The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives.”
“The time being”, of course, is that until after the election. In other words, Trump may well have been right, again.
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