Philadelphia Federal Reserve President Partick Harker says Fed rate hike matter can wait till the US Presidential election will take place in November. Will US elections result affect Fed decision?
14 October, AtoZForex – Philadelphia Federal Reserve (Fed) President Patrick Harker believes that the Fed may want to postpone the decision regarding the Fed rate hike to the time after the US Presidential election.
Fed Harker US election concerns
Normally Fed authorities are trying to distance themselves from the electoral politics. Therefore, Mr. Harker’s comments unusually indicated the Fed’s intention to tailor the policy based on the result of the Presidential race. Patrick Harker does not have a vote at Fed’s meeting this November, yet he will participate in the talks.
Philadelphia Fed President stated he had been supporting the rate increase at the Fed’s September policy gathering, as well as he highlighted that politics would never play a significant role in the Fed decision-making process. Mr. Harker added:
“What I’m worried about is depending on the outcome of the election and what happens after that, if there are policies that would have distortive effects that we would have to respond to, we’ll have to respond.”
Two rate hikes in 2017?
Traders believe that there is almost no chance of the November interest rate hike due to the approaching US Presidential elections. Janet Yellen, the Chairwoman of Fed also reiterated that politics will not ever affect Fed policy decisions.
A number of opinions are existing in the market, where Hillary Clinton leads currently and Donald Trump is believed to bring a disruption to the economy in case he wins the Presidential race.
Mr. Harker stated that the central bank should raise rates once by the end of 2016, adding:
“Despite frequent talk about a sub-par economy, we’re actually doing pretty well.”
He also stated that the markets can expect as much as two interest rate hikes in the upcoming year. His comments reflect the comments of the Federal Open Market Committee (FOMC) members. Few members indicated the timing of the rate hike as “relatively soon” during the FOMC meeting minutes.
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