On Wednesday’s episode of “Kudlow” on the Fox Business Network, Breitbart economics editor John Carney argued that the Federal Reserve should have delayed its decision to cut interest rates until after the election. By reducing rates by 50 basis points now, the Fed has effectively locked itself into making a similar cut in November, regardless of the outcome of the election.
Carney stated, “They should have waited until November. There’s no economic theory that suggests that cutting rates in September will have a significant impact on the country’s economic path. In fact, it’s likely that the Fed has inadvertently committed to a series of 50 basis point cuts, regardless of who wins the election.”
Carney pointed out that if Donald Trump is elected, the Fed will be in a difficult position if they want to reduce the rate cut to 25 basis points in November. “It will look like they were trying to boost the economy for Kamala Harris, but then decided to scale back when Donald Trump took office. That would be a politically explosive situation.”
Carney also noted that the increase in long-term federal funds rate projections is a clear indication that the country is facing a more significant underlying inflation problem. “This is a result of government overspending,” he explained.
