The US Federal Reserve will meet on March 15th and 16th. The bullish US non-farm employment report last week (+242,000) added steam to the argument that the Fed could raise again. It seems unlikely. But there is a political case for it. Why?
After next week, the Fed meets only two more times before the national conventions of the Democrat and Republican parties. The Fed meets April 26th-27th and June 14th-15th. The Republicans meet to nominate their man on July 18th through the 21st in Cleveland, Ohio. The Democrats meet to nominate their woman on July 25th through the 28th in Philadelphia, Pennsylvania.
To avoid the appearance (and the reality) of interfering with domestic politics, the Fed will be reluctant to do anything dramatic during the run up to the November election. Granted, the US central bank is nominally independent, in political terms. Its mandate is to do what’s right (for whom is a good question) no matter the political ramifications.
In reality, Janet Yellen will have her hands tied from March on. And from that point, the big moves in the currency markets won’t come from US interest rate policy. They’ll come from GDP figures, employment figures, and whatever crazy, hair-brained schemes you get from the Bank of Japan and the ECB.
Category: Economics