Breitbart News economics editor John Carney said Thursday on Fox Business Network’s “Kudlow” that the politicization of the Federal Reserve is cemented in its decision to cut interest rates so close to an election.
Host Larry Kudlow said, “John, you have been saying from day one, I’ve been joining you, but the Fed’s move last September was political. I don’t care. I mean, for all the reasons I said, all right, the numbers don’t prove him out. We don’t need any bigger. We probably didn’t need any changes in the Fed funds rate. And some people are now saying there aren’t going to be any more changes in the Fed funds rate. But my point, before we get to the details of the economy, Powell has done what central bankers should not, must not do. I mean, there’s such a thing as monetary politics. He has dragged the Fed to a new low.”
He added, “And I think it’s going to take a while for the Fed to buy back the credibility that Jay Powell has lost for them.”
Carney said, “Absolutely. He blew their credibility by not waiting until after the election. They have a meeting right after the election. They could have waited until November, cut then. Nothing in monetary theory would ever tell you you need to cut in September or else everything will fall apart. You can’t wait until November. That’s just craziness. It was a political move to begin with. I said they shouldn’t do it at the time. They definitely shouldn’t do it now that we have the data to back it up. And by the way that was another reason to wait. They had a they saw two months of soft data in the jobs market and they said that’s it we’re gonna cut. Yeah. If they had waited they would have seen the report on the jobs that just came out they would have seen the CPI number and they could have said, whoa 50 is way too big maybe let’s do 25 or let’s wait till December to cut. What’s the rush, if not for politics?”
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