Q: With Trump demanding the “independent Fed” reduce interest rates….how could this or not affect the stock market?
Thanks
Ben
Thanks
Ben
5i Research Answer:
Jerome Powell has been fairly clear that he will not 'bend the knee' to any requests like this and that the FED is an independent body. Of course, these things are always easier said than done. In the short term, lower rates are likely good for markets regardless. If it leads to higher inflation, then it would start to become problematic. There is a scenario where if rates were 'forced lower', markets could actually go down in anticipation of higher inflation but it also likely depends on how quickly and aggressively any change occurs. Keep in mind Trump does a lot of threatening but the reality is typically more balanced.