Interest Rate Hike Raises Questions

As 2016 draws to a close, there is still discussion surrounding the long-awaited rate hike that is supposed to take place this week during the Fed meeting. While it is almost guaranteed that the 25-basis point increase will go through, the real questions are regarding the words that will be used to initiate this hike.

With the S&P 500 reaching highs, and the jobs reports signaling solid growth there is no reason Yellen should be concerned with moving forward. But many are asking whether there will be discussion surrounding the surprise election of Donald Trump. Clearly, there were moments of instability surrounding November, and there are still waves of populism affecting the European Union; it has been a rocky year for most of us.

But the Fed made their mission straightforward-there will be no political involvement in the decisions that the central bank makes. The bigger question, then, is what happens when there is such  a huge parallel between what happens in the political arena and the economy. The likeliness of a hike are 97%, but the disagreement is to why exactly. Results will be give at the meeting on 2:30PM on Wednesday, December 14.

Artem R.


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