Friday, September 2, 2016

Politics, Not Economics ?

There is no member of the Board of Governors for the Fed that does NOT want to raise or "normalize" interest rates.  The question is when.  Guessing when has become an obsession on Wall Street.

If today's Jobs Report had showed over 200 thousand jobs were created last month, the Fed would take that as an indication of a strong economy and would be more inclined to raise rates soon, as in September.  Since we created only 151 thousand jobs last month, the Fed will probably wait until December and then raise it a mere quarter-point.  So what!

The Fed will soon be lambasted no matter what they do.  If they wait until December, the Republicans will accuse them of "playing politics" by NOT raising rates before the election, which would hurt the incumbent administration (read:  Democrats).  If they raise rates this month, the Democrats will howl that the Fed is pandering to the Republicans, who control Congress.

Who do you want howling at YOU - Republicans or Democrats?