With inflation still far higher than the Fed’s long-term target of 2%, and a tight labour market that has shown little sign of easing amidst economy-cooling efforts, the Fed is unlikely to pivot around the US mid-term election.
The Fed, though its board of governors are nominated by the US President and elected by the Senate, is run independently from the federal government, so that decisions over its monetary policies will not be swayed by political bias, but rather to ensure price stability and full employment in the country.
Hence, it is unlikely that the Fed will take any action to assist either political party in the coming mid-term election, to the detriment of its political independence in its monetary policies decision-making.
Far more important is the coming monthly inflation prints, jobs data and economy growth, as the Fed digest the latest information and look for signs of the inflation abating and economy cooling, as the earlier rate hikes propagate through the economy and cause repercussions through the various industries and sectors.
Given the lagging effects of the rate hikes, I’m cautiously optimistic that positive signals will emerge early next year on cooling prices, giving room to the Fed to rein in its aggressive monetary tightening and ease its pace and magnitude of rate-hiking to avoid landing the economy into excessive hardship and causing pains to the markets.
The day will come when the Fed finally pivots, and we shall celebrate, but it is not now.
@TigerEvents@TigerStars@TigerWire@MillionaireTiger@CaptainTiger
Comments
Pivot from hawish to even more hawkish. [LOL]
Inflation must be control before it control all of us. [YoYo]