The Fed will hike rates next week — then what?

The language it uses and the reaction from the incoming administration will tell us a lot
  • President-elect Trump clearly intends business-friendly policies, but some pro-business policies in theory don’t turn out that way in practice.
  • The Fed's rate-hike next week is a cinch; depending on the effects, it could give ammunition to those who say it should be confined to a mathematical formula.
  • In the outside world, Trump’s elevation has changed nothing economic, which leaves the Fed raising rates while the rest of the world is still easing.

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Mortgage interest rates have stabilized, but any other financial stability at the moment is an illusion. Each new cabinet appointee and tweet flurry brings more understanding of policy ahead. On the domestic side, this will be the most anti-regulatory administration ever. Whether also the most business-friendly since Coolidge, we’ll wait to see. The Tweet-Elect clearly intends it to be the most business-friendly, but some pro-business policies in theory don’t turn out that way in practice. The Fed and its meeting next week At the top of that list is the Fed. Its rate-hike next week is a lead-pipe cinch. That hike, together with the language the Fed uses and its new dot-scattergram, may launch the greatest tweet-storm in history. A right-wing mob has asserted for a generation that the Fed should have its wings clipped. Some support for trimming Fed powers has been nothing more than Congressional envy: "If anyone around here is going to have a lot of power and screw things...