Sunday, October 28, 2018

The Wall Street Journal Joins Trump in Attacking the Federal Reserve

The Wall Street Journal editorial board has joined President Trump in calling for the Federal Reserve to slow down its interest rate hikes.

From a Sunday WSJ editorial:
 [I]t’s already clear that areas of the economy sensitive to interest rates are struggling... the growth data should cause the Federal Reserve to think hard about the interest-rate increase it has anticipated for December.
Of course, this is hardly a call for the Fed to stop manipulating the economy.  Indeed, it is just the opposite. It is a call for the Fed to adopt a more aggressive mad Keynesian money printing policy by keeping interest rates low.

This is a particularly dangerous demand at the present time when consumer prices are beginning to tick up at a more rapid pace.

Something that the WSJ competitor, the Financial Times, seems to recognize much more clearly.

At the same time the WSJ editorial board is calling for the Fed to be less aggressive in its interest hikes, FT seems to have a better grasp of  the decisions being made by senior corporate executives. It reports:
The world’s big makers of consumer goods are starting to raise prices on everything from soap to soup as rising costs of raw materials spread through supply chains to supermarket shelves.
Companies including Procter & Gamble in the US and Unilever in Europe recently put shoppers on notice to expect higher charges at the checkout, and several other leading groups including L’OrĂ©al, Reckitt Benckiser and Kellogg could add to this trend with their earnings reports next week.
It is a marked change from earlier in the year...
The Fed should be completely out of the money printing business (End the Fed!) but it is particularly dangerous on the price inflation front at present for the Fed to halt the baby step interest rate hikes that it has adopted.

If it succumbs to the demands of  WSJ and Trump and halts or slows its interest rate hikes, we will all be paying for the decision by having to pay even more at the grocery store than we are already likely to pay as a result of the ongoing accelerated price inflation that appears already built into the system.


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