Economists Don’t See Trump Political Turmoil Derailing June Rate Hike

The various White House scandals won’t stop the Federal Reserve from raising short-term interest rates next month, economists said Thursday.

Analysts said they were not swayed by the fall in Wall Street expectations for a rate hike on Wednesday. Fed funds futures fell along with U.S. stocks on concerns that President Donald Trump’s pro-growth legislative agenda was in jeopardy.



“I’m pretty sure the decline in federal-funds futures is in response to things the Fed doesn’t care about,” said Thomas Simons, an economist at Jefferies.

“I don’t think they are concerned with a general dysfunction in Washington,” he said.

The Fed believes the economy has made cumulative progress toward full employment and 2% inflation and believes the level of interest rates as not being appropriate, Simons added.

“The [Fed] cavalry is not coming” to rescue investors from a market selloff, said Krishna Guha, vice chairman of Evercore ISI.

via MarketWatch

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza