Fed Hints at Rate Rise but Yellen will Play Politics

Fed Hints at Rate Rise but Yellen will Play Politics

Fed Hints at Rate Rise but Yellen will Play Politics

A rate rise is over due in the USA but whether or not Yellen will take that step is the real question.

Yellen has continued the Bernanke free money model to help keep the US Economy alive. Politically it is going to be a hard call, if Yellen does raise rates on the eve of the US Election (which is needed) the fall in US Equities may well tip the election in Trumps favor.

Perhaps, like many times before, she will do nothing. The most likely time for a rate increase will be after the November Election, in the first 6 months of a new Presidency.

Fed Vice Chairman Stanley Fischer gave a generally upbeat assessment of the economy’s current strength, saying the job market was close to full strength and still improving.

“We are close to our targets,” Fischer said in prepared remarks for a conference in Aspen, Colorado.

Fischer’s comments come ahead of a speech scheduled on Friday by Fed Chair Janet Yellen who is expected to give guidance on interest rate policy. New York Fed President William Dudley said last week a rate hike would be possible at the Fed’s next policy meeting in September.

The Fed in June pointed to two rate increases in what remains of 2016 but investors see almost no chance of an increases at its September or November meetings. Prices for interest rate future contracts show investors see roughly 50/50 odds of an increase at the Fed’s last meeting of the year in December.

Fischer, who has argued in the past that the Fed needed to be wary of being too slow in raising interest rates, made no such argument on Sunday.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.