Fed Gives Trump Pre-Election Victory With Expected Rate Hold According to reports, the Fed is expected to hold interest rates steady on Wednesday - days before the midterms. This is a clear victory for Trump, because it saves his party from raising interest rates on the eve of the election, which would have worsened the economic pain that voters are already feeling. The central bank has a long-standing tendency to avoid tightening just before elections; Since 1990, the only time it has raised rates within a week of an election was a 0.75 basis point increase six days before the 2022 term. Markets are pricing the chances of holding at about 90%, and a Reuters poll of 100 economists found that 94 expect no move this month. For a president who spent months demanding lower borrowing costs, even a break is preferable to the alternative — and it denies Democrats a new talking point about rising mortgage and credit card bills during the last campaign. The case for holding is built on the argument that the Fed has already done enough for now. Officials raised interest rates in September for the first time in three years, and long-term bond yields jumped on their own, doing some of the tightening work for them. But the decision is not without controversy. The consumer price index in September reached 3.7%, above expectations and almost double the Fed's 2% target, and energy prices from the Iran war are still flowing into other goods and services. TD Securities expects three officials to oppose a hike, and Bank of America continued its call for a 25 basis point hike this month. Opponents will emphasize that this is a political break as much as an economic break - a "hawkish grip" that keeps December well. For Trump, the victory is tactical and not lasting. The Fed is expected to hike in December, after the votes are counted, and the underlying inflation problem - driven in part by the war Trump himself started - has not gone away.

Fed Gives Trump Pre-Election Victory With Expected Rate Hold According to reports, the Fed is expected to hold interest rates steady on Wednesday - days before the midterms. This is a clear victory for Trump, because it saves his party from raising interest rates on the eve of the election, which would have worsened the economic pain that voters are already feeling. The central bank has a long-standing tendency to avoid tightening just before elections; Since 1990, the only time it has raised rates within a week of an election was a 0.75 basis point increase six days before the 2022 term. Markets are pricing the chances of holding at about 90%, and a Reuters poll of 100 economists found that 94 expect no move this month. For a president who spent months demanding lower borrowing costs, even a break is preferable to the alternative — and it denies Democrats a new talking point about rising mortgage and credit card bills during the last campaign. The case for holding is built on the argument that the Fed has already done enough for now. Officials raised interest rates in September for the first time in three years, and long-term bond yields jumped on their own, doing some of the tightening work for them. But the decision is not without controversy. The consumer price index in September reached 3.7%, above expectations and almost double the Fed's 2% target, and energy prices from the Iran war are still flowing into other goods and services. TD Securities expects three officials to oppose a hike, and Bank of America continued its call for a 25 basis point hike this month. Opponents will emphasize that this is a political break as much as an economic break - a "hawkish grip" that keeps December well. For Trump, the victory is tactical and not lasting. The Fed is expected to hike in December, after the votes are counted, and the underlying inflation problem - driven in part by the war Trump himself started - has not gone away.