Trump continues to demand for lower rates from the Fed
- Powell met with Trump and Mnuchin at the White House on Monday
- The more you think about the Trump-Powell meeting, the more ominous it seems
- Trump says he told Powell that Fed has set interest rates too high relative to other countries
But it does not look like markets are buying too much into the story that this will mean that the Fed will cut rates next month or even in Q1 2020. In fact, Fed funds futures have barely changed from the end of last week:
Fed funds futures @ today (19 November)
Fed funds futures @ Friday (15 November)
That being said, this is one of those things that could help tilt the balance if markets remain indecisive about a potential rate cut by the Fed from hereon.
The key takeaway from the meeting yesterday is that Trump continues to demand for a weaker dollar and his thinking is that the way to get there is via the Fed taking rates lower - maybe to the point of even introducing NIRP?
It's far-fetched to think that the Fed will pursue such course of action in the near future but truth to be told, has the Fed really been politically impartial in 2019?
Even if you have a piddling hint of a doubt over that matter, it's more than enough to say that the continued pressure on the Fed has certainly played some role - however trivial it may be - in affecting the trajectory of monetary policy in the US this year.
So, was yesterday's meeting inconsequential in the big picture? Only time will tell.
