Trump Says Yellen Keeping Rates Low To Protect Obama

Tyler Durden's picture

Make no mistake, what you saw with the Fed’s September meeting and subsequent (in)decision was an FOMC that simply froze like a deer in headlights. As we’ve documented exhaustively, there are no right answers and Janet Yellen only made it worse by, in Deutsche Bank’s words, “removing the fourth wall” and admitting that the committee is reflexive. 

The Fed cannot hike for fear that a soaring dollar will accelerate EM outflows and plunge the world’s most important emerging economies into chaos. 

But remaining on hold risks precipitating the very same outcome because by missing the window for liftoff, the FOMC has fostered an environment in which all EMs are constantly on their toes with no idea when or even if the “symbolic” 25bps hike will ever come. The attendant uncertainty engenders the very same capital outflows as a hike might. 

And then there are of course considerations about what the FOMC is telegraphing about the risks to the US economy. September’s “clean relent” telegraphed a dour outlook and that, in turn, weighed on domestic risk (apparently bad news is bad news again). But hiking and thereby conveying a positive outlook for the US economy could well cause the dollar to soar (because if the ECB and BoJ are still easing, the policy divergence would be exacerbated in a liftoff scenario, giving the USD a strong tailwind) which would be a negative for some US corporates and could well weigh on the economy going forward. 

So this is the impossible scenario the Fed finds itself in and it’s all complicated by the fact that we are heading into an election year. For his part, Donald Trump believes Yellen is deliberately delaying liftoff not because she is simply confused as to what to do, but because she’s trying to help the Obama administration. Here’s more via Bloomberg:

According to Donald Trump, Janet Yellen's decision to delay hiking interest rates is motivated by politics. 


“This is a political thing, keeping these interest rates at this level,” Trump, the billionaire Republican presidential candidate, said in a Wednesday interview with Bloomberg Television's Stephanie Ruhle. “Janet Yellen for political reasons is keeping interest rates so low that the next guy or person who takes over as president could have a real problem.”


That problem spurred by raising rates, Trump argued, could be “a recession or worse.”


On the other hand, Trump faulted the Federal Reserve for not having acted sooner. “Yellen is keeping rates too low, too long,” Trump said. 

Here are some other highlights from the interview: 

“Yellen is doing this with the blessing of the President because he doesn’t want to have a recession - or worse- in his administration.”


“I’m a developer, I’m not complaining from my own standpoint, I’m just saying that at some point, you have to raise interest rates, you pay nothing. They are trying to put the recession - and it could be a beauty into the next administration.” 

Now, it's probably safe to say that Trump doesn't understand just how convoluted the Fed's reaction function has become at this point, which means he's likely predisposed to thinking that the FOMC's decision making is more political than it actually is. That's not to suggest that the Fed is truly "independent" per se, it's just to say that at this point, Obama's legacy is probably not particularly high on the list of things that keep Janet Yellen up at night. 

That said, there are very real questions as to whether the Fed will risk raising rates in an election year and on that note, we'll leave you with some thoughts from BofAML as presented here first earlier this month.

Via BofAML's US Economics Team,

Experience and independence both say “yes”

A popular view among some market participants is that the Fed is unlikely to hike in a presidential election year. While many economic and market factors may influence when and how often the Fed hikes in the upcoming months, we do not expect the timing of US elections to play any meaningful role in the Fed’s policy deliberations. Neither historical experience during the past several hiking cycles, nor the Fed’s own desire for policy independence, suggests this will act as any constraint on the hiking cycle. Rather, we expect the Fed to gradually tighten policy in a data dependent manner during 2016 — regardless of how the political winds may blow.

Recent history: most hikes during election years

Historically, presidential election years have not precluded policy tightening by the Fed. Of the last five Fed hiking cycles, four either began during or continued into an election year. Two of these — 1988 and 2004 — started in an election year, some months before Election Day (in March and June, respectively). Two others — 1983 and 1999 — began the year before an election, with hikes continuing well into the following year. Both these hiking cycles stopped before Election Day (in August and May, respectively), perhaps fueling speculation about the Fed’s motives. But the Fed did not resume hiking once Election Day passed — in contrast to what one should expect if the Fed were temporarily holding back hikes around an election. Rather, each of these tightening cycles concluded as the Fed returned rates to a more neutral stance.

Guarded independence

Is past performance a good predictor of future policy? Given how strongly independence is held at the Fed, we suspect it is. Numerous studies show that politically independent central banks deliver the best inflation and growth outcomes, and Fed officials know that even the perception of political influence can undermine their best intentions. Rather than trying to avoid being news by keeping policy unchanged in an election year, the best strategy would be to move in a very deliberate, well-communicated and datadependent way — one that not only has nothing to do with the political cycle, but wouldn’t even give that impression. Indeed, if the Fed really wanted to minimize political pressure today, it is not at all obvious if the better choice would be to hike to appease its most vocal Congressional critics or to stand pat. Any action or inaction is bound to upset (at least) one party — so why even try?

Unlikely variations on an unlikely theme

Finally, the view that the Fed cannot or will not hike in an election year yields some unlikely implications for monetary policy. One is that the Fed has to get going very soon — and perhaps somewhat aggressively front-load rate hikes — in anticipation of sitting on its hands for some time. In contrast, Fed officials have warned that they don’t want to hike prematurely, and they have emphasized both a data dependent and gradual approach to normalizing policy. Another variation is that if the Fed delays this year, they won’t be able to lift off for nearly another year — and thereby put policy significantly “behind the curve.” But it’s hard to believe the Fed would choose to wait that long and potentially let inflation get out of control because of politics; recent speeches note the risks of hiking too late. In the end, while several factors could potentially delay Fed rate hikes, we very much doubt next year’s presidential election will be one of them.  

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order66's picture

Those with their brain's on were talking about this exact scenario 2 years ago (at least).

AR15AU's picture

Yes and the stock market was plunging fiercely exactly during ballot casting time in 2008 when outsider Obama needed swing voters to overcome the incumbent party. 

wee-weed up's picture

Yep, Trump's right! Yellen's an Obozo sycophant just like his ass-kissing MSM.

Remington IV's picture

good one zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

palmereldritch's picture

The Donald should really spend some quality time on ZH and expand his horizons.

Making a connection between Yellen and Obama on this story is like thinking blaming a retarded mollusk will explain why the tsunami plunge avoidance team is biding its time until that time is just right...or just completely unavoidable

Bokkenrijder's picture

Trumpie should also be happy, because low interest rates protect real estate 'empires' like his.

I'd be VERY curious to see what would be left of his so-called real estate 'empire' if interest rates were at 3-5%.

I bet he would be bankrupt...again!

Trumpie desperately needs ZIRP, and what better way to guarantee that then by going into politics? (hint hint, wink wink, nod nod)

But of course Americans and most ZH-ers are stupid and will fall for his lies and cheap rhetoric, just like they fell for "change you can believe in," "get amazing abs in just 30 days or your money back" and "read my lips, no new taxes."

Heck, Karl Denninger and that idiot Bill-Flanders-Still love Trumpie as well, so 'nuf said... (even RT has quietly stopped inviting Karl Denninger as 'talking head' on their shows, hehehe)

Zoomorph's picture

You believe that Trump cares more about $$$ than his ego, legacy, or America and that everything he says is an elaborate lie?

I kind of doubt that.

Bokkenrijder's picture

He cares about both. He needs money in order to inflate his ego/legacy.

America probably comes last, politics is just a vehicle...

Fukushima Fricassee's picture
Fukushima Fricassee (not verified) Bokkenrijder Oct 19, 2015 5:44 AM

All of you cocksucking "liberal" idiot shits think everyone is just like you. They are not.

TongueStun's picture

Like the socialist jew media is going to allow a recession to start during the Obama depression....

NoDebt's picture

The Fed isn't doing this because Obama is in the WH.  They are doing it because the Fed is supporting the government's ability to service it's debt through suppressed interest rates.  The percentage of the Feral Government's budget supporting interest on the debt is roughly the same as it was when Ronald Reagan was in the WH.  Back then the debt was much smaller and interest rates were double digits.  Now the debt is much larger but interest rates are near zero.  Raise the average interest rate on government debt by 1% and they'll have to slash-and-burn a lot of discretionary spending.  Raise them by 2% and just meeting "entitlement" payments becomes problematic.

This is why we (and most other developed/Western countries that are all in the same boat) are becoming more like Japan every passing day.

palmereldritch's picture

But the endgame is still, as it is always, debt expansion to facilitate ownership change n'est-ce pas?


The candy from strangers appears to be just so much sweeter this time....

Bokkenrijder's picture

Yup, people fall for Trump's cheap rhetoric like turkeys voting for Thanksgiving. In the end he's just another I-need-big-banks-and-ZIRP-to-fund-my-real-estate-empire Wall Street insider, but people are too blind to see that.

TongueStun's picture
TongueStun (not verified) Bokkenrijder Oct 19, 2015 7:20 AM

You take stupidity to a whole new level.....


Do you ever post anything other than Lying and Name calling?   Link?

joego1's picture

Winner Winner Chicken Dinner!

SSRI Junkie's picture

true, but we didn't have zero rates until after obola got into office and started giving away the farm with every free shit program going through the roof and student loans being taken over by the feral gubmint. all the tbtf corporate monstrocities got even more than that.

smackdog's picture

The government is Obama.  He can hire and fire the Chairman "at will".

SilverRhino's picture

If the GOP wins you can be damned sure the Fed will raise rates and let everything crash to pin it all on the Republicans come 2017.

SilverRhino's picture

If the GOP wins you can be damned sure the Fed will raise rates and let everything crash to pin it all on the Republicans come 2017.

OldPhart's picture

I'm starting to think that what the FED will do is simply print a trillion dollars. No purchase of anything, no bonds, stocks or loans involved.  Just a magical appearance of another trillion.  What have they got left?

The second trillion would be a day later.

Fuck China, Japan and others that hold our debt, let's add another two trillion within days and pay it direct to the government to see what they do with it.  They're the so-called policy experts, and 'national leaders' (HA!)

Escrava Isaura's picture



“GOP is not a political party anymore, it’s a radical insurgency.” Chomsky

nmewn's picture

Well, it's hard to tell if that was an insult of the GOP by Chomsky or a compliment given this administration was arming ISIS, the indiscriminate droning of nations we are not at war with and the current national debt along with unfunded liabilities.

Could you elaborate? ;-)

Escrava Isaura's picture



Sure. My pleasure:


You can tell that even by the votes. I mean, any issue of any complexity is going to have some diversity of opinion. But when you get a unanimous vote to kill the Iranian deal or the Affordable Care Act or whatever the next thing may be, you know you’re not dealing with a political party.


It is important to bear in mind that the Republicans have long abandoned the pretense of functioning as a normal parliamentary party. Rather, they have become a “radical insurgency” that scarcely seeks to participate in normal parliamentary politics, as observed by the respected conservative political commentator Norman Ornstein of the right-wing American Enterprise Institute.


Since Ronald Reagan, the leadership has plunged so far into the pockets of the very rich and the corporate sector that they can attract votes only by mobilizing sectors of the population that have not previously been an organized political force, among them extremist evangelical Christians, now probably the majority of Republican voters; remnants of the former slave-holding States; nativists who are terrified that “they” are taking our white Christian Anglo-Saxon country away from us; and others who turn the Republican primaries into spectacles remote from the mainstream of modern society—though not the mainstream of the most powerful country in world history.


nmewn's picture

You do realize "slave holding states" also included Brazil right? And Hillary! (gasp!) is ass deep in the "deep pockets" of whoever pays her the most...right? And Christianity has NOTHING to do with skin color or governmental systems...right?

booboo's picture

So if you want to pin the underwhelming success of the Afordable Care Act on the Dems be my guest. As for the Iran Deal, bah, it took a heap of money and deals to keep the dual citizen congress peep Jews on board so if that is any indication of  "Parliamentary Polyrazzmataz bullshit session" you go El Guapo.

nmewn's picture

The underwhelming success of ObamaCare is a gross understatement, no doubt...of the 23 state exchanges created under that ObamaNation governmental mandate 21 are losing money, that in itself is a conflicting statement I suppose when one considers they are supposed to be "non-profit"...but of course by New And Improved! bizzaro world old accounting standards that doesn't matter anymore...suffice to say one third have shut down completely stranding "the folks".

But fear not, fresh on the heels of the blinding success of the Iran "deal" he's making noises about another "deal" with the certifiable nutcase who runs North Korea.

What could possibly go wrong? ;-)

TeamDepends's picture

They don't call them Brazil Nuts for nothing.

Escrava Isaura's picture



Sorry. Had to step outside.

Brazil did have more slaves than America. Way more. More than 10 times than America. But, Brazil is not the topic. Trump/Republicans are.

Unfortunately, some don't read into the context. Chomsky is very critical of the democrats and academia. But, again, not the topic here. Trump/Republicans are.


Now, the topic is NOT Christianity, because again, Americans have absolutely, unequivocally NO clue what Christianity is all about. However, American Christians do know, unnoticed to most of them, because they are so naive, that they are the biggest, and hypocritical fascists.    


By Chris Hedges: Twenty-five years ago, when Pat Robertson and other radio and televangelists first spoke of the United States becoming a Christian nation that would build a global Christian empire, it was hard to take such hyperbolic rhetoric seriously. Today, such language no longer sounds like hyperbole but poses, instead, a very real threat to our freedom and our way of life.


… members of Congress who have earned between 80 and 100 percent approval ratings from the three most influential Christian Right advocacy groups as one of many signs that the movement is burrowing deep inside the American government to subvert it. The movement's call to dismantle the wall between church and state and the intolerance it preaches against all who do not conform to its warped vision of a Christian America are pumped into tens of millions of American homes through Christian television and radio stations, as well as reinforced through the curriculum in Christian schools.


erg's picture

I just noticed you changed your avatar.

I've always thought of you as ZH's crazy Aunt in the attic.

dark pools of soros's picture

Brazil is about 70% trannies so of course they are fucked.   They love it



OldPhart's picture

Our War Criminal Congress approval rating is around 8%, below used car dealers and fuckin' lawyers.

How did that transform to 80 to 100 percent approval from ANY advocacy group?

Source your info, please.

dreadnaught's picture

>>Our War Criminal Congress approval rating is around 8%, below used car dealers and fuckin' lawyers.


and its a REPUBLICAN CONgress, too!

fiftybagger's picture

You are completely deluded.  Chomsky is a CIA stooge.  Pat Robertson is a Masonic plant.  Your lovely country was raped and pillaged by the Vatican, not Christians.  And neocon pedophile warmongers are about as far from Jesus Christ as east is from west.

Silver For The People

Teh Finn's picture
Teh Finn (not verified) Escrava Isaura Oct 18, 2015 7:40 PM

Salon?  ROFL.

Escrava Isaura's picture



So, check this link, instead:


Policraticus's picture

It sounds like your opinion of the mainstream mimics the view of the main stream media's. So any group which does not agree with the current status is part of the "radical insurgency"? Interesting. At least we know what your views are grounded on. So what future do you want? One which is similar to what we have, one that continues on the path we are taking, or one which reverts back to our where we came from. When I refer to "where we came from" I am thinking of the thought process of all free men in the time of July 4th 1776.

Escrava Isaura's picture



free men in the time of July 4th 1776?


Go and ask a black person about free men in 1776.


They will die of laughing so hard about your statement.


OldPhart's picture

Crispus Attucks, first to die in the Revolution, was a freed black man.

Shut the fuck up.

The fact that our black people are so poorly educated is because the democrats created a new plantation.

And, no, I'm not a republican, anymore, not since the treatment of Ron Paul.


monad's picture

...and completely misguided, ignorant and used. Less than 1::7 odds any black person in America today had American slaves as ancestors. Slaves were treated far better than serfs. After freeing themselves the serfs freed the slaves and don't you forget it, asshat.

perchprism's picture

Aw, shit. You can blow me now.

NoDebt's picture

"when you get a unanimous vote to kill the Iranian deal or the Affordable Care Act or whatever the next thing may be, you know you’re not dealing with a political party"

None of those bills EVER had anything close to popular support.  Back when the Rs at least pretended to have a spine, I call that "doing their job".  Now, of course, they are falling in line and supporting everything the President says with only token (verbal) disagrement.  Which should meet with your approval of how an opposition party should act.

Escrava Isaura's picture



You can get public support for anything depended in how your ‘phrase’ the question.


I find very unlikely that most Americans are not support of health care.


Chaos_Theory's picture

Don't confuse health care with the ACA/Obamacare.  The latter is nothing more than a means of forcing citizens to pay private companies for a service you pay monthly premiums, and then pay even higher deductibles if you dare actually use the service.  Oh, and if you opt out, you pay a "tax" to the gov (any doubt that is what they're hoping for?  Free taxation stream paired with no services!).  If a Repub POTUS had pushed this through a Repub congress, it would be universally hailed as a corporate scheme to enrich the healthcare industry.  And that critique would be right.  The only "benefit" is the party that pushed it can snag votes from the mortards who think it is free (because someone else has paid for it).  Even that has consequences...remember the story about the hourly-wage earners complaining the $15-an hour minimum wage pushed them over the threshold for subsidies, and begged for less hours?

OldPhart's picture

Not to mention the 60% increase in premiums that is coming.  ObozzoCare was designed to fail so they would bring in a single payer plan (Government) that could determine who gets what/when/where/how and why.

In the meantime, Government Approved Doctors get to wear spiffy uniforms with little symbols on their sleeves, and report all interactions with you to the bureaucracy that is determined to minimize the cost to government in any form possible.  (Actually written into ObamaCare, I read it the night it was released.  Did not go through the Social Security/Medicare side of it because I wasn't interested (at the time, though it'll probably haunt me as the worst of the whole fucking thing).)

TongueStun's picture
TongueStun (not verified) OldPhart Oct 19, 2015 7:25 AM

60%? Yore raycess.... Why do you want to deny Illegal Aliens their constituutional right to FREE SHIT?

alphamentalist's picture

dumbass. plese tell us how the democrats are any different? they are two sides of the same bum penny.

TongueStun's picture
TongueStun (not verified) alphamentalist Oct 19, 2015 7:30 AM

SAME? You need to go get a dictionary......