Fed Faces Prospect of Another Interest Rate Increase Just Before Midterm Elections — SkimNews
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- Federal funds futures traders are pricing in roughly 70% odds that the Fed will raise rates another quarter-point at its October 27-28 meeting, lifting the target range to 4% to 4.25%.
- The Federal Reserve raised rates last week in its first major hike in years to combat inflation, but a fresh wave of strong economic data has accelerated expectations for a follow-up move before midterms.
- S&P Global's September private-sector survey showed U.S. business activity surging to a five-year high, following a stronger-than-expected jobs report earlier this month and robust retail sales the week prior.
- President Trump has accused the Fed of being politically motivated and publicly targeted individual policymakers for refusing to deliver substantially lower borrowing costs.
- The Fed's October meeting falls just days before midterm elections that will determine how much leeway Trump has to enact his agenda in the latter half of his term.
- The Federal Reserve asserts it does not factor the electoral calendar into its decisions, noting historical instances where it raised or cut rates near elections when economic conditions warranted.
Why it matters: A rate hike timed days before midterms would put the Fed directly in the crosshairs of a president who has already attacked its policymakers by name — yet the institution insists it acts on economic data, not politics. With business activity at a five-year high and jobs and retail sales beating expectations, the Fed's hand appears forced by the strength of the very expansion Trump has championed.
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