What was that about the Federal Reserve staying out of politics? You know, it must be independent -- stick with managing the money. Don't get involved with policy!
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That just went out the window. At precisely the moment when the Federal Reserve should be cutting rates, a former top official says don't do it, because it would help Trump!
Ain't that something! Bill Dudley used to run the New York Fed. He's a heavy hitter. Lots of clout. He says don't "bail out an administration that keeps making bad choices on trade policy." He goes on: "Trump's re-election arguably presents a threat to the U.S. and global economy." He's taken sides. He's gone political. He's joined the anti-Trumpers, advising his former colleagues to shift monetary policy so our president is not re-elected.
This is absolutely wrong. Interest rate policy should not be dictated by political preference. What? Don't cut rates because Bill Dudley doesn't like Trump's trade policy? It’s just plain wrong.
If the Fed Chair, Jay Powell, came out in favor of Mr. Trump's trade policy, I'd say the same thing: politics is not your job. Knock it off. The Fed's job is to keep inflation in check and go for full employment. That’s it. The re-election of the president is none of your business!
Fortunately, the response to Bill Dudley's outburst has been quick and clear: "dangerous,” "misguided," "compromises the Fed's independence" are just some of the comments from both sides of the political aisle. Maybe the Trump haters will rally to Dudley, but the financial pros are not.
Today, interest rates continue to tumble all around the world, leaving our rates above everybody else's. That's got to change. The Fed must cut, and soon. Whether it helps the president, or not, is irrelevant.
The Fed should not be influenced by politics. Bill Dudley is out of line.