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Is The Fed Trying To Tank The Trump Economy Before The Midterms?

Dallas Fed President Robert Kaplan said he still favors the central bank raising short-term interest rates three more times before deciding whether more increases will be necessary to keep the economy on an even keel.

This suggests the Federal Reserve should lift rates at its December, March and June policy meetings “unless something changes,” Mr. Kaplan said Tuesday in a Wall Street Journal interview.

Trump Market SelloffFed Chairman Jerome Powell said then that rates remain low enough to continue stimulating economic growth. But according to the Wall Street Journal other officials have expressed a range of views, and some uncertainty, about how high rates would have to go to reach a so-called neutral level that neither spurs nor slows growth.

The policy makers’ latest economic forecasts showed a median estimate of 3% for this neutral point over the long term. But some estimate the neutral level could be higher in the short run according to reporting by the Wall Street Journal’s Michael S. Derby.

According to reporting by CNBC interest rates have been on the rise over the past several weeks, with the benchmark 10-year Treasury note — a barometer for corporate debt and mortgages rates — climbing to its highest level in more than seven years.

Rates took their latest spike higher amid a report Friday which showed the lowest unemployment rate in 49 years, along with rising wages.

The CNBC report adds to the now-widespread view that the labor market is near or beyond full employment and shows wages are starting to accelerate higher. This could be a worry for Fed officials trying to keep a lid on inflation.

Translation for those not aligned with the Wall Street – Washington – Silicon Valley Axis: The Fed wants to stifle your wage growth and job mobility by establishing a so-called neutral level that neither spurs nor slows economic growth.

President Trump said Tuesday that he does not like the Federal Reserve's decision to continue to hike interest rates.

He also said that the United States economy does not have an inflation problem and that the central bank is moving too quickly in trying to curb price increases.

"I think we don't have to go as fast," the president answered to a question about the Fed raising rates by CNBC from the south lawn of the White House.

Trump has said in the past that he was "not thrilled" with the rate hikes and reportedly told donors at a fundraiser that Fed Chairman Jerome Powell had not been the "cheap money" banker he hoped for.

Wednesday President Trump went further and knocked the Federal Reserve for continuing to raise interest rates despite some recent market turbulence.

"I think the Fed is making a mistake. They are so tight. I think the Fed has gone crazy," the president said after walking off Air Force One in Erie, Pennsylvania for a rally.

Fears about rapidly rising rates helped cause the Dow Jones Industrial Average to drop more than 800 points Wednesday. The S&P 500 posted its worst day since February and clinched its first five-day losing streak since 2016.

White House press secretary Sarah Sanders downplayed Wednesday's steep sell-off on Wall Street, noting the U.S. economy remains in good shape.

"The fundamentals and future of the U.S. economy remain incredibly strong," Sanders said in a statement. President Trump's economic policies are the reasons for these historic successes and they have created a solid base for continued growth."

Sarah Sanders’ statement was correct, but it seems clear to us that the Federal Reserve leadership is not in sync with President’s economic goals. While the President has set a target of 4 percent growth and seemed well on the way to achieving it through deregulation and tax reform. The Fed’s goal of a neutral level that neither spurs nor slows economic growth is in clear conflict with that goal.

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The question posed

I'd say yes, the Fed is trying to tank the economy to make Trump look bad. The interest rate hikes are overwhelmingly excessive.