For the last decade, there have been only 3 instances when the Federal Reserve increased the interest rate. Two of those three increases have taken place in the last three months alone, since Donald Trump won the presidential election on November 8th 2016.
One may wonder what’s happening, right? Between June of 2006, when George W. Bush was POTUS and December 2015, there were no FED interest rate hikes to speak of.
According to the mainstream media and FED’s own documents, Barack Obama’s presidency benefited from the most lax monetary policy in United States’ history. Just remember Quantitative Easing, a near zero interest rate from the FED et al, which resulted in the net doubling of the national debt under Obama, from 9 trillion dollars to almost 20 trillion.
Finally, after almost a decade of helicopter money, the Federal Reserve announced its first rate hike in December of 2015 during Barack Obama’s tenure at the White House. CNBC reported at the time that:
Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic conditions, the committee decided to raise the target range for the federal funds rate to ¼ to ½ percent,” the FOMC’s post-meeting statement said. “The stance of monetary policy remains accommodative after this increase, thereby supporting further improvements in labor Premarket conditions and a return to 2 percent inflation.
After Donald Trump was elected POTUS on November 8th, the Federal Reserve increased interest rates twice, first on December 14th and then again earlier this week, on March 15th by .25%.
These rate hikes have a big impact over the economy, even if they look minuscule at first sight.
Lower interest rates usually spur the economy by making corporate and consumer borrowing easier. Higher interest rates are intended to slow down the economy by making borrowing harder.
The obvious question here is what is Janet Yellen doing? Is the Federal Reserve trying to destroy President Trump’s economic recovery or it’s just the US economy doing so great suddenly that 2 rate hikes (with more to come in 2017 as per FED’s promise) in so many months are absolutely normal?
During the Obama years, the US saw historically low GDP growth rates which never passed 3% and that’s the reason for which the FED kept interest rates low, in order to keep the US economy on life support via cheap money.
Is the establishment fearing that Trump’s low taxes/slashing regulations policies together with repealing/replacing the Affordable Care Act will lead to unprecedented prosperity for Americans? We’ll just have to wait and see about that, but I suspect both.