Fed's Rate Call to Inflame Political Firestorm
The Federal Reserve is truly trapped between a rock and a hard place politically ahead of this week's high-stakes rate decision.
If the central bank leans hawkish with a 25 basis point "baby step" cut, it risks inflaming backlash from Trump's MAGA allies about intentionally stifling the economy to hurt Republicans' chances. But go too dovish with a 50+ basis point cut, and it draws fire for caving to political pressure and enabling excessive inflation.
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The Fed is squarely caught in the crosshairs heading into the contentious 2024 midterm campaign season. A modest 25 basis point hike could be viewed as too little, too late by progressives demanding more forceful action. Yet anything larger marks a major pivot from prior guidance on higher terminal rates - opening the door for credibility attacks.
Most economists expect Powell to hew toward the hawkish 25 basis point script to keep a lid on inflation. But a growing minority warns that path risks putting the "soft landing" at risk amid deteriorating data.
No matter which way the Fed leans, the fallout will likely prove explosive across the political divide. The venomous backlash threatens to instantly inject the rate decision into 2024 campaign rhetoric on both sides.
For the apolitical Fed, this week's call is shaping up as a classic no-win scenario destined to inflame the already scorching political firestorm surrounding the Biden vs. Trump rematch. Circle Wednesday as a potential overnight accelerant on an already raging inferno of polarization.
YOU NEED TO WATCH THIS BEFORE TOMORROW
CNBC’s ‘Prophet’ issues urgent Fed warning
In March 2022, the Federal Reserve raised interest rates for the first time in five years.
It triggered a brutal bear market that wiped out $9 trillion of American wealth... and slashed the average investor's portfolio nearly in half.
Now, according to the man whom CNBC nicknamed 'The Prophet'...
The Fed's next move is about to have a similar ripple effect on ordinary folks across America