The Fed Fails to Cut Rates, Despite the President’s Wishes

The Fed Fails to Cut Rates, Despite the President’s Wishes

At yesterday’s meeting, the Fed left interest rates unchanged.

This decision is a BIG deal. That’s because this decision flies directly in the face of President Trump’s wishes…

In the preceding two weeks, President Trump gave the Fed the implicit signal to start easing monetary policy (cutting interest rates).

Simply take a look at this tweet from the President:

Donald Trump Tweet Inflation

What the President was implying here is that inflation is low, so the Fed could safely ease monetary policy without hurting the economy.

As if this wasn’t a clear enough warning, yesterday the President made his views EXPLICIT when the following headline hit the newswires…

TicToc by Bloomberg

When asked by reporters later that afternoon if he would indeed demote Fed Chair Jerome Powell, the President responded, “Let’s see what he does…”

In this context, the fact that the Powell-lead Fed didn’t cut interest rates yesterday is truly astonishing.

True, the Fed is technically supposed to be politically independent. But to anyone who’s paid attention over the last 40 years, it’s obvious that is total bunk.

The Fed has always kowtowed to the White House in one way or another…

Perhaps the most egregious example of this happened in 2012, when the Ben Bernanke-lead Fed launched a third round of quantitative easing (QE3) to help the Obama administration re-election campaign.

Given the economic data at that time, the move was completely unwarranted – unless, of course, the Fed was trying to do the administration’s bidding.

Put simply, the Fed is a political entity of sorts. Anyone who argues otherwise hasn’t read up on history.

This is why it’s so stunning to see the Fed failing to cut rates yesterday, despite the clear signals from the White House that the President wants them to.

Is the Fed Sabotaging the Trump Administration?

What’s more, this move is particularly stunning in the wake of revelations that the Fed might have raised rates back in 2018 specifically because Fed leaders were annoyed at the President.

If the U.S. Central Bank is purposefully sabotaging the President’s economic agenda, this would qualify as a kind of “deep state” insurrection.

How will this play out?

The specific details are murky, but one thing is clear: If Fed Chair Jerome Powell doesn’t ease monetary policy soon, the President is going to find someone who will.

The markets are acutely aware of this – which is why they are predicting there will be THREE rate cuts this year.

The financial markets are aligning for truly spectacular returns for those investors who prepare now for what’s coming…

On that note, I’ve already shown investors one way of playing this central bank screw-up – an investment that’s already up over 5% in the last three weeks.

I’m now preparing for an even more aggressive strategy to profit from the next round of central bank policies.

I’ll tell you all about it in the coming weeks, but the initial results are some of the best I’ve ever seen in my 15-year career. The last two trades were up 100% and 60% respectively… and we held both less than a week!

Until tomorrow…

 

Graham Summers

Graham Summers

Editor Graham Summers has spent the last 15 years building a reputation as one of the most sought after and highly respected investment strategists on the planet. His work has been read and quoted by former Presidential advisors, award-winning institutional analysts, U.S. Senators, and more. He’s one of the few analysts on the planet to...

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