Let it be no secret that the Obama administration will be leaving poison pills and traps behind should Trump win.
Make no mistake, what you saw with the Fed’s September meeting and subsequent (in)decision was an FOMC that simply froze like a deer in headlights. As we’ve documented exhaustively, there are no right answers and Janet Yellen only made it worse by, in Deutsche Bank’s words, “removing the fourth wall” and admitting that the committee is reflexive.
The Fed cannot hike for fear that a soaring dollar will accelerate EM outflows and plunge the world’s most important emerging economies into chaos.
So this is the impossible scenario the Fed finds itself in and it’s all complicated by the fact that we are heading into an election year. For his part, Donald Trump believes Yellen is deliberately delaying liftoff not because she is simply confused as to what to do, but because she’s trying to help the Obama administration. Here’s more via Bloomberg:According to Donald Trump, Janet Yellen’s decision to delay hiking interest rates is motivated by politics.
“This is a political thing, keeping these interest rates at this level,” Trump, the billionaire Republican presidential candidate, said in a Wednesday interview with Bloomberg Television’s Stephanie Ruhle. “Janet Yellen for political reasons is keeping interest rates so low that the next guy or person who takes over as president could have a real problem.”
That problem spurred by raising rates, Trump argued, could be “a recession or worse.”
On the other hand, Trump faulted the Federal Reserve for not having acted sooner. “Yellen is keeping rates too low, too long,” Trump said.
Here are some other highlights from the interview:“Yellen is doing this with the blessing of the President because he doesn’t want to have a recession – or worse- in his administration.”
“I’m a developer, I’m not complaining from my own standpoint, I’m just saying that at some point, you have to raise interest rates, you pay nothing. They are trying to put the recession – and it could be a beauty into the next administration.”
Full article: Trump Says Yellen Keeping Rates Low To Protect Obama (Zero Hedge)